Ed's journey of self-destruction, which began in the final episode of season 1, peaks in the episode. He's menacing and resolved and gorgeous through the whole thing and Taika Waititi and Con O'Neil are both on fire in their big scene together. I've re-watched this episode several times and their performances are riveting.
Amidst all of the emotional darkness, this is a visually stunning, beautiful episode. The set design for the Red "Flag is incredible (Zheng Yi Sao's ship journal in Chinese script describes actual daily things that would occur on an 18th century vessel - incredible attention to detail!). Similarly, the elements in this episode - from the red sky (sailor's warning) at dawn to the Revenge sailing at sunset, to it being lashed in a terrible storm - it's all looks incredible.
By the end of this episode, you will simply have to either take some time to process the intensity of what you just saw, or immediately watch episode 3.