The foremost reason behind this arc is the journey of the Straw Hats to Fish-Man Island, which was a long-awaited destination acting much like a doorway to the New World. Fish-Man Island is underwater, has vivid marine life, and complex social dynamics among fishmen, merfolk, and humans.
The arc's storyline initiates with the dramatic arrival of the Straw Hat Pirates to Fish-Man Island, which is located 10,000 meters below sea level. This would be further complicated by the presence of the New Fish-Man Pirates, led by Hody Jones, who held a grudge against humans. In this arc, the Straw Hats get caught up in political issues on the island and an old humans-versus-fishmen conflict.
The arc goes back in time to explain more about the history of the island, mainly how Queen Otohime and Fisher Tiger worked on bringing humans and fishmen closer together. Such a backstory gives light to the current social issues of the island and even character motivations that include Jimbei and Hody Jones. The Straw Hats learn of the precarious balancing act of the island between the World Government and Big Mom, one of the Four Emperors, who is always naughty and declaring the whole island as her territory.
Luffy's prophecy, coupled with his involvement in the destruction of Fishman Island, is well central to the plot. After it was revealed that Luffy had a prophecy surrounding the destruction of Fish-Man Island and that his friend Shirahoshi turned out to be the ancient weapon known as Poseidon, this created tension and anticipation throughout the arc. Intense moments abound when Hody Jones mounts a coup against the royal family due to his hatred of humans and tries to rally support for an attempt at taking over the island.
The last climax for this arc would be this one big battle between the Straw Hats and New Fish-Man Pirates. In this battle, though giving fans the long-anticipated look at new powers from the Straw Hats' side, it dealt with racism, historical trauma, and hate passed down through generations. In this struggle for deep-seated prejudice and the power to move beyond past grievances, Luffy's fight against Hody Jones symbolizes much.
There are also a number of subplots with the other Straw Hats—Sanji's comedic gut reactions to mermaids, Zoro exploring the island—but these are otherwise just spots of levity and character building against the more serious main plot. This arc also introduces several new world-building elements, such as coating ships so they can sail underwater and the New World politics.
It finally ends with the defeat of Hody Jones and his New Fish-Man Pirates, resulting in a change in how the island approaches its human relations. Luffy saves the day, along with his crew members, crossing the divide between humans and fishmen to fulfill both Queen Otohime's and Fisher Tiger's dreams. The Straw Hats also emerge victorious, and Fish-Man Island declares itself under Luffy's protection, a declaration that conflicts with Big Mom's claim and therefore sets up future conflicts.
There are several reasons this arc is important to the One Piece narrative. First of all, this is their first big adventure in the New World with the Straw Hats, showcasing growth and new abilities after the time skip. The arc is also deeply run on themes of racism and historical injustice, remarking on real-world issues through the lens of the Fish-Man Island conflict. It also expands the world-building of One Piece with new concepts and characters who will play roles in future arcs.
The Fish-Man Island Arc further goes on to lay plot threads for the future, such as with Big Mom or ancient weapons like Poseidon. In conclusion, although resolution brought closure to the immediate conflict on Fish-Man Island, it opens up new possibilities and challenges for the Straw Hats as they continue into the New World.