I remember this as being one of the best episodes of the first season at the time. In rewatching it, it's still good, but it's amazing how 21 seasons of Next-Gen era stories can change your perspective.
Picard is completely amazed at how realistic and detailed the holodeck is. At the time, we were seeing it for the first time as well, so we relate to his enthusiasm. Nowadays, it's just the holodeck. Of course it can do all these things, what's the big deal?
There is a line of dialogue where Dr. Crusher says to Picard that the new upgrades to the holodeck are complete, so he should go try them out. So presumably holodecks just weren't this advanced before, and the holodeck as we saw it in "Code of Honor" would seem to back this up. As long as we don't have a prequel show to TNG, it should hold up.
The other interesting thing is how, once the holodeck characters discover they are simply holodeck characters, they begin to wonder about their existence. It sets things up nicely for the EMH Doctor on Voyager.