The observation periscope had a larger entry opening. (I'm talking real-life optics here) That makes more light pass through and helps you better see contrast. The attack periscope was much smaller to prevent detection (physical size, or wake generation). But that also makes it less to not usefull in dark situations, or where you need magnification. Because when a small piece of sky is stretched out due to magnification, also the light intensity level per square arcminute get's diminished before it enters your eye.
Indeed, if the view opening is higher, your viewable horizon also extends further. Allowing earlier detection. But these reasons have their tradeoff.
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