I didn't word that correctly, you're right In being able to see someone tapping their screen.

I don't know how familiar you are with the knock code. These are the reasons why it's near impossible for people around you to figure out the pattern, while still being very convenient:

You can have a very long knockcode, but still enter it really fast once commited to muscle memory

You can enter it while the phone is in Standby with display of

And lastly, the 4 seems weren't absolute in size and location on display. You could pick up your phone and enter the knockcode with your thumb, only moving it in minimal distances relative to each segments, and the knockcode would be registered. These possible small movements compared with a relatively long code make it nigh impossible to figure out from observation