Self-realization means, of course, to realize the Self. Realizing the small self is a completely different thing and it is usually called self-actualization. In fact in Self-realization, you step out of the small self forever. There are two distinct types of Self-realization: one without “lovebliss” and one with. In a strict evolutionary progression lovebliss comes after void. It is the project of a lifetime to get Self-realized. You don’t just do a couple of “spiritual” weekend seminars and then forget about it. You will know when you are stuck in this project, because you will intuitively know that there is a Pure Self that is really you, and you will not rest, ever, until you merge with it.
Witnessing is different from self-observation. In self-observation the subject objectifies itself (looks at itself) and this is something everybody can do. In witnessing you step temporarily out of the subject and near into pure being (but not quite). It is characterized by being a witness to your small self, but not yet having consciously realized your real Self in oneness with it. Practicing “being in the now” is an attempt to reach this temporary witnessing (this practice can not take you further into Self-realization).
When you have a good meditation, this is the state you reach. In fact one could say all meditation techniques aim at this state. You have to leave the meditation technique behind at just the right moment, if you want to go beyond witnessing and merge with the Self. Some meditations may be ecstatic and give rise to cosmic orgasms, but they are not necessarily deeper into the Self. Bliss and ecstasy signify a sudden arousal of the kundalini energy and a rush of shakti (spiritual energy) through your system. Your bliss may be true lovebliss. To give you a hint about what is what, know that first there is love, then there is bliss and ecstasy, then there is silence in pure being, then there is love-bliss which is both more intense than bliss and ecstasy, yet totally calm and unmoving since it is the unmanifest Self and is causeless and without an object.
You do not need ecstatic experiences to reach Self-realization as Pure Being without love-bliss. But there is no benefit in not developing the bliss of Shakti prior to merging with the Self, on the contrary. Some say bliss is a distraction. But since bliss is a sign of an awakened kundalini it is not as simple as that. If you merge into bliss you will not only reach basic Self-realization sooner, but you will also move on from it sooner.
It is possible to reach a state of freedom from identification with the “I”, where the identification-mechanism is crushed, yet you are not Self-realized. This is the witnessing-state. It is the I AM-ness state, where one knows oneself to be nobody, but the most subtle I-ness has not been dissolved. It is easy to assume this state is Self-realization, since there are no identifications, one witnesses everything, and one has realized oneself as nothing (nobody). But this state is characterized by a duality between self-as-nobody and everything else, and as such it is truly witnessing everything. The self-as-nobody has a very, very subtle sense of being a nobody (nothing), and one truly is nobody (nothing), but there still remains an unmanifest sense of I-ness. There will be a sense of “I am nothingness”, thus the I is unmanifest. This is the basic I-ness principle. This I-ness is the root of ignorance.
Once I-ness goes away for ever, you are Self-realized. Self-realization can be without bliss or it can be with bliss, but it is the same basic freedom from I-ness and oneness with the Self.