If I recall correctly, the distinction was introduced a year or two back. Originally the ID displayed at the top of the observation was sluggish, i.e. if I ID something as ‘plant’ and then you come along and ID it as taraxacum, it would still display plantae at the top. Only after a second person ID’s it as taraxacum would the title of the observation change. This led to questions on the google group of why the ‘title taxon’ (for lack of a better term) would not change with leading ID’s. So in response there are now two taxa, the observation taxon and the community taxon.
There doesn’t seem to be much interest in this change, but I have asked for this a number of times as well. If the observer explicitly requests no community ID, then don’t feed their observation to the community by calling it ‘needs ID’.
… and in the images on taxon detail pages, which is great if you’re looking to mop up wrong ID’s that stand out like a sore thumb, but pretty bad if you’re looking for correctly ID’d pictures to compare yours to.