Daniel Faraday has always been a compelling character on "Lost", because it always felt like he knew more than he was letting on, thanks to his journal and his knowledge of arcane time-travel physics. It's about time that there was an episode dedicated to his origins and journey. It's unfortunate that this episode also represents the end of that journey.
On the other hand, it does make a certain amount of dramatic sense. How often does it seem like the one person with all the answers is right there to provide the exposition when the time comes? This makes it a lot more interesting, because now Daniel is gone, leaving only his notes and thoughts, scattered as they are. So his knowledge will be filtered through the familiar eyes and minds of those with other agendas.
The net effect is likely to be the exact opposite of what Daniel intended. If Daniel's story represents anything, it's that he was probably wrong. Desmond's attempts to save Charlie in the third season were, in essence, exactly the kind of "variable" that Daniel tries to become. As Daniel's mother made very clear at the time, the course of time corrects for anything a "variable" might do.
Daniel spends most of the episode trying to change things, but in all likelihood, he doesn't. Whatever happened, happened. He prompts Pierre Chang to send certain individuals off the island to protect them from the impending "incident". (With only three hours left to the season, that moment is swiftly approaching.) By mentioning that he wants to destroy the electromagnetic anomaly under the location of the Swan Station, using Jughead in the process, it's extremely likely that he brings about the conditions that lead to everything that he tries to prevent.
In fact, as many others have guessed, bringing Jughead closer to the Swan Station is likely to explain why there was an inability of women on the island to survive pregnancy among the Others. That inability was clearly not a problem prior to "the incident". It might even explain Ben's eventual cancer, and the island's inability to heal it. If a bomb leaking radiation is close to the electromagnetic anomaly when it bursts with unforeseen intensity, "the incident" could have spread just enough radiation to leave the island inhabitable yet still have unforeseen consequences later.
(This leaves aside the contradictions with "Via Domus" that would result, if this were all accurate. There's clearly no time for the Dharma Initiative to build a generator the size of what was seen in the game. The game was supposed to be canon, however, so it may be that the apparent discrepancies will make sense in time.)
In the larger sense, this episode demonstrates the tragedy of Daniel's life, tying into the futility of trying to change the course of history. Daniel's mother spent every day of his life preparing him for this moment. It's a tragedy for Eloise Hawking as well, and it may even explain why she was so sure, speaking with Desmond, that time will always course-correct.