The song's lyrics describe the story of a girl devoted to God and her parents who is thrown into emotional disarray after encountering a member of the opposite sex. It has been interpreted as the story of a young woman and her steadfast embrace of adolescence through the loss of her own virginity. Its title derives from a pet name Wilson had for his wife.
The original version of "Wonderful" has been described by author Mark Dillon as "proto-psychedelic chamber pop". It is the only Smile composition to refer to God by name. When it was remade for Smiley Smile, one verse was omitted from its lyrics, it being replaced by a 35-second interlude described as "a left turn into a hash den". Containing the group's giggling and nonsense doo-wop chanting, the phrase "don't think you're God" can be heard in the mass of voices. It has been suggested that this interlude represents the female protagonist's sexual awakening.
It was based around a harpsichord rhythm recorded on November 1966 by Wilson alone. This basic harpsichord track was then mixed with some horn overdubs together with a bass, both entering in the second verse. A recording session featuring only Wilson and bandmate Al Jardine was held in January 1967 in which they recorded the backing vocals. Afterwards, Brian recorded the lead vocal on his own.
An outtake from sometime around this session, "He Gives Speeches" (a composition from the male perspective), is argued[by whom?] as a short break that was supposed to be inserted between the second and third verse of "Wonderful", keeping in tune with Wilson's concept of using modular techniques done throughout the entire album, as well as tying up with the similar theme of sexual awakening. Due to it being branded as an outtake, it is obvious that Wilson was not able to splice "He Gives Speeches" to the main song.[according to whom?]
Another recording took place a few months after, with Carl Wilson on lead vocals and Brian on backup. This version is radically different from the first version, as it features a jazzed-up arrangement accompanied by scat singing. This recording is known as the "Rock with Me, Henry" version due to the scatting of the phrase "Pretty baby/Won't you rock with me, Henry?" repeated all over again until it takes over majority of the song. Wilson also recorded an unusual group vocal collage in order to splice it between the verses, similar to his earlier attempt with the "He Gives Speeches" segment, but (just like the first version) never got around to linking the two compositions together.
The final Smiley Smile version contains sustained organ and piano chords as nearly the only accompaniment.
As a solo artist, Brian Wilson revisited the song in 1995 for his I Just Wasn't Made For These Times album, and then again for Brian Wilson Presents Smile in 2004. The 2004 version was completed and performed with the rest of the finally completed Smile songs, live in February 2004 by Brian Wilson and his band, including members of the Wondermints with prior Beach Boys guitarist/vocalist Jeff Foskett. A studio version of the Smile arrangement was subsequently recorded and included on the Smile studio album when it was released later in 2004. The song was released as a limited 7" single backed with "Wind Chimes" totaling 5,000 copies on blue, green, and yellow vinyl. In the 2004 version, "Wonderful" is linked thematically with the second suite which also included "Child Is Father of the Man" and "Surf's Up".
Author Andrew Hickey wrote of the song, "If there was any justice in the world, this song would now be regarded as every bit the classic that "God Only Knows" is, as on every level that matters – musical and lyrical sophistication, beauty, the compassion that pours out of every syllable of the song – this is the superior of that song and almost every other I've heard." In 2011 Mike Love commended Parks' "marvelous job" with the lyrics and has described the piece as beautiful and sensitive, possessing ability to move listeners to tears. He told Goldmine magazine "‘Wonderful’ is an amazing, amazing piece of work. Holy shit! Van Dyke and Brian did a great collaboration on that one. It’s a really beautiful song. That’s probably my favorite thing from the Smile project.”Power pop musician Matthew Sweet praised the Smile version for its baroque feel, whereas "it gets a little more trivialized on Smiley Smile".