When I think of S3, the word that comes to mind for me is climax. S3 really feels like the ultimate coming together of a number of long-building plot points to me. The build in all the major stories is brilliant, through-and-through. I mean, The Mayor is a phenomenal big bad. He's built well, his threat becomes more and more intense, his dynamic with Faith is amazing. Faith's arc is excellent as well, and not just because she's an awesome character. Her relationship with Buffy develops perfectly and the evolution of it throughout the entire season was one of my favorite aspects of the season. Her presence really added to the show. You could see Faith getting edgier and darker at such a steady pace, and you just knew she had to square off with Buffy eventually. Their final fight was an amazing finish to Faith's storyline.
And of course, the Angel storyline was off-the-charts incredible. I thought it fed off of what happened in S2 so well. All of the struggles all the characters go through as Angel reintroduces himself back to the team were interesting to watch (even Xander's). I'm a huge sucker for all the Bangel moments, but I thought Angel really began to develop into an outstanding character. The ending to S3, with Angel walking away, was one of the best moments of pure emotion I found in the entire series.
Also, I thought S3 was strong for the entire cast. Xander, Willow, Cordelia and Oz all have terrific seasonal arcs that I felt really fed off each other. I know some aren't crazy about the way Willow and Xander finally got together, but I really liked it.
The stand alone episodes are the best from every season in my books. "Faith, Hope & Trick", "Homecoming", "Band Candy", "Revelations", "Lover's Walk", "Amends", "The Wish", "The Zeppo", "Helpless", "Dopplegangland" and "Earshot" were all amazing. I mean hell, I just named like half the freaking season.
S3 just fired on every cylinder imaginable. There isn't a single major weakness. I think all around, S3 is the strongest Buffy we ever saw. It's balanced so well and delivers on all the big angles, storylines and arcs with great payoffs.
S2 might be my favorite season, but I love S3.