In this episode we're introduced to the majority of the characters that will make up the base for the Naruto anime and manga series. We're also briefly introduced to the relationships that they share. For example, it becomes obvious early on that Sakura and Ino are rivals. It also becomes apparent that Naruto has a crush on Sakura, Sakura has a crush on Sasuke, and Hinata has a crush on Naruto.
At the beginning of this episode, we watch Naruto enjoy a seemingly innocent breakfast before his first meeting as a real ninja. Although it does not seem so at the time, this scene is important relative to the rest of the episode. Naruto arrives at the academy to be paired up in a three man squad. Shortly after entering, Sakura and Ino come into the classroom and begin arguing over who will sit next to Sasuke. Seeing Sasuke as a threat, not just romantic but in many other areas, Naruto decides to get up in his face, which leads to the classic Sasuke and Naruto kiss, one of the most memorable scenes of the anime early on.
Being paired up with Sasuke is the last thing that Naruto wanted, while being paired up with Sakura was exactly what he wanted. This begins the love hate triangle that we get to witness in the coming episodes. Sakura tries desperately to get Sasuke's attention whilst snubbing Naruto all the while despite his vying for her attention. Sasuke, on the other hand, wants nothing to do with either one of them.
Naruto breaks into Sasuke's room and ties him up, transforming into Sasuke in an attempt to get closer to Sakura. He plays it smooth getting close to her and requests what Sakura thinks of Naruto. Sakura replies that she thinks Naruto is annoying, which hurts his feelings but does not stop him from continuing to play as Sasuke and try for a kiss. Just before the moment of magic occurs, Naruto gets a raging case of diarrhea and must rush off to the bathroom. At this point, Sasuke has freed himself and is looking for Naruto. Sasuke passes by Sakura and she looks at him wantonly, expecting the scene to pick back up where it left off and result in a romantic kiss. The real Sasuke is not interested though and lets Sakura know that he thinks she's annoying. There is also a brief snippet in this conversation that reveals that Sasuke, like Naruto, is orphaned.
Sasuke bumps into Naruto as Naruto is leaving the bathroom, and although for a moment we get the excited thought that they might have their first rival battle, it is not to be. Naruto's stomach acts back up and he leaves Sasuke standing there dumb founded. Seconds later, Sasuke decides it's not worth his time and walks away. The cause of Naruto's tummy ache? Sour milk from his morning breakfast.