The Enterprise comes upon a hostile, barely habitable, moon from which an old Starfleet distress signal is coming, a stress signal from the starship Essex a Daedalus-Class starship that went missing nearly 200 years ago. At first Picard is content to move-on, having solved the mystery of this missing ship but Troi senses life on the moon so the crew decides to investigate.
Electromagnetic disturbances in the atmosphere of the moon necessitates taking a shuttle down, in experiences a turbulent flight resulting in a crash-landing. Troi and Data come out of the shuttle un-harmed but Riker broke his arm in the impact. Soon, O'Brien beams down with transport-enhancers to allow everyone to beam safely back to the ship. Before transporting O'Brien is struck by lightening which takes out the others as well, four entities of light converge on the group and enter their bodies, though the entity intended for Riker leaves without entering him.
Once back on the ship Troi, Data and O'Brien begin acting strangely, trying to convince Picard to take the ship to the southern pole of the moon, the entity in Data grows impatient and tries to take the ship there himself, resulting in Riker shutting down bridge functions and the three possessed officers flee the ship and end up sealing themselves in Ten-Forward with hostages after the bridge tries to capture them.
Picard offers himself for a hostage exchange as some crew were injured the siege on Ten-Forward. Once there, Picard learns what is going on. The leader of the group, in Troi, claims they are the dis-embodied spirits of the Essex bridge-crew. When the ship crashed two centuries ago somehow the disturbances on the moon gave the ship's crew a non-corporeal form and they've been trapped there ever sense. They plan to have the Enterprise remove their remains from the moon and give them a proper burial back home. They believe that doing this will give their spirits rest.
Naturally, Picard is dubious to these claims but plays along as the bridge crew works to remove the entities from the bodies of the three officers. Eventually, all efforts fail and Picard allows the group to head for a cargo bay where they will beam-aboard the remains of the Essex crew.
Once in the cargo bay, Picard is able to get the real story out of the Essex captain. He reveals that Picard is right, they're not the spirits of the crashed crew, but rather the spirits of alien prisoners "incarcerated" in a non-corporeal form on the moon. He plans to use the Enterprise crew as hosts for the remaining prisoners so they can flee the moon.
Picard and the bridge play a gambit where they're able to use a field to confine the beamed-aboard spirits in the cargo bay and Picard offers the lead-alien the choice of them either returning to the surface peacefully or he will open the cargo-bay door, blowing the crew and all of the alien "spirits" out into space. The alien agrees to Picard's terms, Troi, Data and O'Brien are returned, unharmed, to Picard and the alien "spirits" are returned to the moon.
I believe this is the first episode of the series to play in the genre of the action/hostage movie genre and it more or less pulls off the idea with a success.
The themes in the episode are very much of the action/hostage-movie genre, generally in the battle between the lead villain (in this case the alien in Troi) and the hostage negotiator (in this case Picard) and the attempts by others to resolve the situation. Riker works as a something of a second-tier negotiator from the bridge while Ro and LaForge work with available equipment to find a solution.
Our three "possessed" actors do a great job in their roles, Meany further solidifying his main-case potential for when he goes to DS9, Spiner does a good job in being the more aggressive "first officer" to the "captain" of the Essex and Sirtis does a great job of the leader of the group in her posturing and voice of being intimidating. It's episodes like this that shows how underused Sirtis tended to be in the series. But when they use her to her full potential she certainly delivers.
There's probably some weak plot-points and quibbles here and there, O"Brien is able to accomplish quite a bit from the small computer terminal in Ten-Forward, but overall this is a pretty solid episode all around.
Of note: In this episode when going down to the surface in the shuttle the group are seen wearing five-point harnesses. I know it's something of a common thing to joke about when it comes to Trek (or any sci-fi) and the lack of seatbelts but those jokes mostly ignore the gravity/inertia manipulation starships (or any sci-fi ship) are capable of (and would have to be in order to achieve relativistic speeds in an instant.) Usually when we see the crew tossed around or something it's due to an unexpected impact or other anomaly that the inertia dampeners cannot 100% compensate for (but likely is still doing *something* considering the speeds and movements we'd be talking about without gravity/inertia manipulation.)
So here, it's odd to see seatbelts used in the shuttle. I believe one of the few times, if not the first time, we see seatbelts used in Trek. Granted, we could argue the atmospheric problems around the moon maybe necessitated them to some degree but I find it hard to believe the movements of the shuttle were severe enough to warrant seatbelts to compensate for the deficiencies in inertial dampeners considering the movements cannot be more violent than the movements experienced on the ship from time-to-time.
It almost looks to me like, maybe, the turbulent shuttle ride was done "in camera", that the shuttle was on a gimble or something to rock it, rather than the old trick of just shaking the camera. I wonder if doing this necessitated the seatbelts for the actors' safety rather than suggesting anything about the restraint system technology of the 24th century.
Without looking it up, I believe this episode is the first one to reference the Daedalus-Class starship, the name given to an early design of the TOS Enterprise, the ship with the sphere-shaped primary hull. We would see a model of this class of ship on occasion in the various series, most notably in the office of Sisko on DS9.
As something of a humorous experience working on the show, Marina Sirtis sites this one as being a lesson in doing her own stunts. When the away team is hit by the lightning they fly backwards and land on their backs. Sirtis has said that she did her own stunt in this scene and managed to fracture her tail-bone on landing, only to discover the final shot was so far away that the extra effort put into the stunt was for naught. "It could have been Worf in Troi's uniform and no one would have known the difference." (para.)
Also, odd for the series at this point, the music in the episode is pretty good.
In short, a good episode that plays in this type of action-movie genre well.
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By which I mean the beginnings of a scene akin to what was in Troi's mind in the previous episode Violations, except for real. Thankfully that didn't happen. 
