The most memorable moments of The Next Generation and the key to its popularity come from the cast and characters. Most often you will read that the series didn't really discover that secret until the 3rd season. This episode is an exception. It was all about character. Picard, Data, and Riker are obvious, but Geordi and even Dr Pulaski contribute well.
Then there is Guinan. Her assistance to Picard at his moment of crisis is poignant and indelibly marked in my mind. Between this episode, The Best of Both Worlds and I, Borg, she has provided some emotionally impacting moments to the show.
Rick Berman used to list this as his favorite episode when asked. I have it right after The Best of Both Worlds on my list simply due to how big that story was and the movie-like feel to it. However, this episode tugs more at the human heart. THIS IS A MUST SEE.