You can self host observble, but you can't self host observablehq.
Literate programming just means the combination of code and documentation/visualisation.
Observablehq provides a nice inline code editor, but that's incidental to what observable is.
Git can also be used with a GUI but that GUI is not essential to what git is.
Simularly observable notebooks can just as well be created without the GUI, in a quite convenient way.
Knuths original literate programming environment consisted of a command line tool to split files that mixed pascal and tex into the pascal and tex source, to be compiled separately.
Which means that according to your definition, the original literate programming system, isn't literate programming.
All the best.
Hope you'll look at it again in the future. In a sense it's your loss, so good luck and take care.
You can't self-host the same way you can self-host the Jupyter Notebook or Jupyter Lab environment.
Or has that changed? Can I work on something offline without communicating with their servers?