What does '眼观鼻鼻观心' represent? Obedience or an attempt to be invisible? Is it more about obedience as in 'obediently looked down and listen to someone's teaching'; 

Or is it more about pretending to be oblivious/invisible? For example two of your bosses are fighting each other, you as their subordinate can only stand and '眼观鼻鼻观心'?

Furthermore, do people really use its literal translation?
眼观鼻 (eyes looking at the nose) = 'look down'

鼻观心  (nose pointing at the chest) = 'lower one's head'

眼观鼻鼻观心 = 'look down and lower head'

It is a graphic description of a posture

This posture can be used to express many things, like humbleness, submissiveness, relaxation and concentration

The two most common activities that require someone to 眼观鼻鼻观心 are praying and meditation . 

'眼观鼻鼻观心地冥想' = 'look down, lower one's head and meditate' (require relaxation)

'眼观鼻鼻观心地祈福' = 'look down, lower one's head and pray for blessing' (require humbleness and concentration)