This was the big one. This was the gateway drug episode, the one consistently pointed at by nearly every early fan when a curious passer-by finally gave in and asked which of these dumb pony episodes should they actually watch. It solidified M.A. Larson's reputation for high-quality episodes, brought us to Cloudsdale, and showed how good the show could be when everyone on the team hit just the right note at the right time.
Rarity also magically turned into an alicorn, so I don't know what all the fuss about Twilight was about.
Like Suited for Success had been Rarity's character-defining episode, this was Rainbow Dash's expository tale. It turned a typically strong-headed and brash character and turned all that against them by showing us her true core, her true apprehensions, and turned her into a more fleshed out character by the end. There have been more analysis of this episode than I care to count, not to mention music videos, stories inspired by the events portrayed, and inclusions into viewing parties since it aired. When pressed, a large number people would tell you that this was the best episode of season one.
After the break, catch Rarity Turns Into An Alicorn.