So I’m presuming you are watching TNG for the first time.
Yes, it’s widely known that S1 and S2 can be a rough ride and that the show doesn’t find its footing until S3.
That being said, from memory, and I’m sure there’ll be argument here about this, while S1 has problems, S2 is arguably the real beginning of the show “getting good”. The main problem with S2 is that it’s got diamonds like this episode and then some bad stuff too that’s probably worse than the worst in S1. The variation is as big as it gets in the show, with this episode being in many top-10 lists of the whole show.
Season 2 is where the show proverbially 'grows the beard' - Riker's literal beard being the trope-namer. But agree that a lot of that is just in comparison to the general level of Season 1 being weak. There are some other very good and important episodes in Season 2 though, like Q Who.
Season 3 is then where TNG really takes off and becomes quite consistent.