Buffy has a vivid dream (a very undead Drusilla dusts Angel) which she fears is prophetic and realises that Spike and Dru may still be alive. Oz finally asks Willow out on a date. She accepts, but remembers the Scoobies are planning a surprise party for Buffy's 17th birthday and instead invites him to the party. Elsewhere, Dru, strong as Buffy dreamed, arranges her own gala event, while Spike, using a wheelchair but quite undead as well, directs his gang to collect scattered pieces of the demon Judge to reassemble for her present. Jenny Calendar gets a visit from a mysterious man who reveals Miss Calendar's Gypsy past, and they discuss her responsibilities in ensuring Angel's continued suffering. The man orders Jenny to separate Angel from the Slayer. On their way to Buffy's surprise party, she and Miss Calendar intercept a piece of the judge and bring it to the party, deducing Dru's plot. Following her Gypsy orders, Jenny encourages Angel on his mission to prevent the dire consequences of reassembly—he must take the Judge's arm by cargo ship to "the remotest region possible." While Angel gives Buffy a Claddagh ring for her birthday during their tearful parting at the dock, Spike's vamps manage to steal the arm back, scrubbing the mission. Later at the library, Buffy has another informative dream, and takes Angel to investigate the factory where Spike and Dru have their lair. They discover the Judge is fully assembled and activated, and Spike and Drusilla capture and taunt the two, debating who will die first. They narrowly escape into the sewer system, then return to Angel's apartment exhausted and drenched. Still suffering from successive threats of losing one another, Angel and Buffy confess feelings each has been trying to suppress. They make love for the first time and fall asleep in each other's arms. Suddenly, in a flash of lightning and a crash of thunder, Angel bolts awake and runs out into the storm, calling Buffy's name in anguish...
This episode begins a tradition of Buffy birthdays gone awry, although Buffy does not celebrate her birthday on-screen in the final season. The 12th or 13th episode of each season is traditionally when Buffy celebrates her birthday; her birthday takes place in episode 12 of Season Three ("Helpless"), episode 12 of Season Four ("A New Man"), episode 13 of Season Five ("Blood Ties") and episode 14 of Season Six ("Older and Far Away"). Buffy's birthday is not shown celebrated in Season One (it presumably occurred before the beginning of the half-long season) or in Season Seven.
Several important plot-lines begin in this episode. Oz and Willow have their first date, commencing one of the longest relationships on the show. Oz also learns about the supernatural forces that plague Sunnydale (which he easily takes in his stride, remarking that it actually explains a lot). Angel loses his soul and reverts to the evil and sadistic Angelus, the Big Bad of Season 2. Jenny's hidden motives are revealed, preluding her eventual untimely death - an event which has lasting effects for the Scooby gang. Spike and Dru are established as worthy adversaries, allowing for Spike's eventual return appearances in Seasons 3 and 4, and for his permanent membership as regular cast for Seasons 5, 6 and 7.
Buffy's birthday gift from Angel, her claddagh ring, not only comes to signify her lost love for the rest of Season 2, but also plays an important part in the beginning of Season 3, first as a resonant antecedent to Scott Hope's impromptu gift, and then as a mystical focus for Angel's return from Acathla's hell dimension.
As revealed in this episode and confirmed in later episodes, Buffy's birthday is in late January, making her a Capricorn on the cusp of Aquarius. The cusp day of Capricorn and Aquarius is the 20th of January, the air date of the following episode.
In the first dream, Willow says to a monkey, "L'hippo a piqué ton pantalon" (French: "The hippo stole your trousers"). This refers back to her conversation with Oz near the end of "What's My Line, Part Two," in which, intentionally absurd, he wonders if the hippo animal cracker is jealous because the monkey is the only animal cracker with pants, and asserts, "All monkeys are French."
Denny's: Xander's fantasy harks back to Cordelia's repeated predictions that he himself is slated for a brilliant career as a pizza delivery boy.
Faust: Angel losing his soul because he attains a moment of pure happiness is reminiscent of the German legend about Faust, a scholar who made a deal with the devil. In gaining all worldly things he agreed that, in return, if he ever attained a moment of pure happiness his soul would forever serve the devil.