The episode introduces Sheryl Lee's second role, Madeleine "Maddy" Ferguson who is the niece of Sarah Palmer.
The episode was to originally to feature a scene in which Cooper visits the graveyard and meets an elderly groundskeeper, who recites a long speech telling Cooper that if he puts his ear to the ground, he can hear those who are buried singing, due to their coffins expanding. The scene was cut due to problems casting the groundskeeper.
Tina Rathborne, the director of the episode, chose to open the episode with a shot centered on Sherilyn Fenn, finding the actress to be "seductive" and "absorbing" in a similar manner to screen icon Marilyn Monroe. Rathborne had initially worried that the episode featured too many static scenes of characters sitting and talking, with little action, and asked David Lynch if she could borrow some of the imagery of the previous episode's surreal dream sequence to keep these conversations more interesting, adding brief snippets of footage as Cooper discussed the dream with the others. Rathborne has noted that this dream-centric approach to the character of Cooper is rooted in Carl Jung's theories of analytical psychology. She felt this was something that had not been seen on television before, and credits Lynch with introducing it to the series. She has also described the narrative, both of "Episode 3" and of Twin Peaks as a whole, as a "Bildungsroman" showing Cooper's development into a more rounded and enlightened person.
When Twin Peaks was rerun on the Bravo cable network in 1993, David Lynch wrote new introductions for each episode that were performed by Catherine Coulson as The Log Lady. The one for this episode was thus:
"There is a sadness in this world, for we are ignorant of many things. Yes - we are ignorant of many beautiful things. Things like the truth. So sadness in our ignorance is very real. The tears are real. What is this thing called a tear? There are even tiny ducts - tear ducts - to produce these tears should the sadness occur.
Then the day when the sadness comes. Then we ask, 'Will the sadness that makes me cry, will the sadness that makes me cry my heart out, will it ever end?' The answer, of course, is yes. One day, the sadness will end."
"There is a sadness in this world, for we are ignorant of many things. Yes - we are ignorant of many beautiful things. Things like the truth. So sadness in our ignorance is very real. The tears are real. What is this thing called a tear? There are even tiny ducts - tear ducts - to produce these tears should the sadness occur.
Then the day when the sadness comes. Then we ask, 'Will the sadness that makes me cry, will the sadness that makes me cry my heart out, will it ever end?' The answer, of course, is yes. One day, the sadness will end."
The episode introduces The Bookhouse Boys (formerly Citizens Brigade) which is a secret society formed to combat the darkness surrounding the town of Twin Peaks.