The most obvious reason for this episode being one of the fans' favorite eps of the entire series is the classic catfight between Krystle and Alexis in the lily pond. It was the ultimate throwdown, with the two Dynasty divas thrashing about in the water, knocking each other down and losing all sense of decorum in the process. But while the fight itself was the ultimate in camp, the events that came before and after it were very dramatic and have been overshadowed by the campy event. To begin with, Krystle was feeling shut out of Blake's life, for weeks now. Her attempts to heal the family met with a cold shoulder from Blake, who told her to stay out it and made her feel like an outsider in her own home. On top of that, Steven moved Danny out of the mansion, taking away the child she almost adopted, which broke Krystle's heart. Krystle was raw. So what would set off this powderkeg and finally cause her to explode in anger? Enter Alexis.
Fallon disowned Alexis for setting up a seduction scene with Fallon's new lover, Mark. Rather than own up to her own jealousy and insecurity (because her lover chose her own daughter over her) or the reason Fallon turned on her (because Fallon found her in Mark's bed), Alexis chose to quickly and conveniently lay blame on Krystle, whom Fallon had gotten closer to. In typical Alexis fashion, she reacted by taunting Krystle, who was already traumatized. At her breaking point, Krystle snapped and let Alexis have it. But the real drama came afterwards. Blake berated Krystle - in front of Alexis noless, and that led Krystle to move out of the mansion. To Krystle, this was unforgivable. She'd had it with the Carringtons. Alexis cost her her unborn child. And Blake was treating her as if she wasn't part of the family. Well, as Krystle told him, they're weren't really married so she didn't have to stay and put up with his crap. This was one episode in which Linda Evans truly shined and wasn't just mere window dressing for Blake. The pain and emotions Krystle were going through rang true in Linda's facial expressions.
The other major developments were the set up for the cliffhanger finale in the next ep with Alexis managing to piss off everybody to the point that they'd want to kill her, which McVane tried to do in this ep (and someone else would try to finish in the finale in the next ep). Very good foreshadowing.
All around a series classic. One of the best episodes of the entire series.