Doing data fetch in the views is a no-go. It defeats the very purpose of MVVM and in particular the Android Jetpack efforts. One of the big reason is the data needs to survive configurations. Putting "data fetching" mechanism in the view defeats that as the view can be destroyed and recreated anytime when need be.
So I would suggest you make sure all calls to the network or any other source of data for that matter revolve around the ViewModel
and never a view. Let the VM feed the data to the View through observer.
Exception to what I have just said is such use case as loading images with Picasso or Glide where by you feed them URL and they load image. But that's a different thing as they are designed to handle that.
UPDATE with followup Questions
it's ok to put observe() still inside Adapter, during the binding process?
No! Data sent to the adapter must be complete in the purpose it is supposed to serve. For example, if you have to do list app and your Top-Level Activity displays all Todos, then you must feed adapter will complete data (Title, Created time, et al).
The data that are not going to be displayed (like descriptions or sub-to-do-lists) and aren't necessary to identify specific to do should not be fetched (unless you want to store them for sole purpose of avoiding a second network call and pass them to the next activity as serialized data).
When user clicks specific To-Do, then launch new activity with its own ViewModel that will fetch details for that activity (assuming you passed some ID with intent).
If the first, then I understand that observe() should not only update data, but also populate it later to Observer and call notifyDataSetChanged(), right?
Observe is a way to post data to the view when either it have changed or the old view was destroyed and so the new view is being given the same old data that survived the "view death". So it is in the same method where updating data of the Adapter should be done and hence call to notifyDataSetChanged()
or similar methods.
I hope that makes it clear.