Excellent episode. In my TNG top-10.
Can't add more to what people have already said. Love that spooky vibe, love the fact that it's got the feel of TOS mixed with the evidently growing confidence that TNG exhibited going into its second season, love just about every aspect of this one. Some great moments: the false USS Yamoto, that scene with the sound of the probe slowly receeding into the darkness and then resurfacing... just about the only scenes which let it down are the Ensign at the Conn being killed off (more because of the improbability of Wesley suddenly not being there, despite being at the helm for the rest of the episode), and that final scene where Picard sagely commends Nagilum for it's curiosity, despite the fact one of his men has been murdered! Picard must have really hated Ensign Haskill.
Riker and Worf seem to have quite an antagonistic relationship in this one too. Maybe partly down to the Son of Mogh still being decidedly 'feral' at this point, but Will looks shit scared of him at times.