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That to me seems like the coolest possibility. Encryption that breaks if someone other than the authorized parties observes it. Something which isn't possible with "traditional" encryption.
encryption breaks if someone "observes more" than is allowed by error correction. Physical world is rarely binary.
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One-time pads seem like a much easier solution, and they're never breakable given any amount of computation. They require upfront preparation to trade the pad, but seem a lot easier than quantum anything.
I'm in the camp that quantum cryptography (i.e. quantum key exchange) is silly. If quantum key exchange is not easier to use than a one-time pad, that's an argument against both, not an argument for a one-time pad. One-time pads are approximately never worth their effort, and in the modal case would just encourage poorer security overall.
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That observation of the communication would break the link, versus capture and (attempt to) decrypt?
What is the practical application of this then, considering that you can choose an arbitrarily large key to make eavesdropping or tampering practically impossible? I don't get what's so exciting about this. Or does this only become practically useful once quantum computing breaks traditional encryption?
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That depends entirely on your application.
Could you give some examples of applications of encryption where the purpose is not to send a message that adversaries may see but cannot understand?