I am assuming you are referring to the initialization of x and y inside the "flyingRobotResetFcn" function. Basically, if you are using a Simulink model as your environment (like in this case), there is no need to initialize any of the observations in your problem. The initial conditions are directly decided by values in your Simulink blocks. However, it is good practive to try and change the initial conditions of every episode so that the agent gets exposed to different scenarios. Reinforcement Learning Toolbox lets you do that using the reset function mechanism. So what is happening here is that we are using the reset function to change x0 and y0 and let the remaining observations to the values determined in the Simulink model.
Hope that helps.