The Otto et al paper, along with all the other observational estimates of low climate sensitivity, has been a bit of a bore for upholders of the climate consensus, distracting them from the daily grind of generating ever more more outlandish estimates of future warming and ever-more scary tales of the impacts.
Riding to the rescue is Drew Shindell of NASA GISS, who has analysed the models and found that he can explain the discrepancy with the observations:
Understanding climate sensitivity is critical to projecting climate change in response to a given forcing scenario. Recent analyses have suggested that transient climate sensitivity is at the low end of the present model range taking into account the reduced warming rates during the past 10–15 years during which forcing has increased markedly. In contrast, comparisons of modelled feedback processes with observations indicate that the most realistic models have higher sensitivities. Here I analyse results from recent climate modelling intercomparison projects to demonstrate that transient climate sensitivity to historical aerosols and ozone is substantially greater than the transient climate sensitivity to CO2. This enhanced sensitivity is primarily caused by more of the forcing being located at Northern Hemisphere middle to high latitudes where it triggers more rapid land responses and stronger feedbacks. I find that accounting for this enhancement largely reconciles the two sets of results, and I conclude that the lowest end of the range of transient climate response to CO2 in present models and assessments (<1.3 °C) is very unlikely.