Once you stop being absorbed in your thoughts, you can observe them from a distance.
You become the awareness of thoughts rather than being lost in them. Its like stepping back and watching clouds pass instead of being carried away by each one
Discussion
I'm reading 'The Power of Now' at the moment and this is the essence of Tolle's message. Honestly, I'm flirting between it being psycho-babble and ultimate enlightenment. It's fascinating to think you can observe your own thoughts from afar.