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Currently in V2 if automatic observed generation handling in place, the observed generation in status is automatically updated only if the controller returns UpdateControl.updateStatus or UpdateControl.updateResourceAndStatus.
This can be a little contra intuitive since if the controller is reconciled successfully with the actual generation and UpdateControl.noUpdate is returned, we still reconciled the target generation so that should be marked. On the other hand noUpdate implies that there should be, well no update on resource.
I propose to change this behavior, document it, so the observed generation is always updated in case of a successful reconciliation.