As a result of the Borg threat (a nice little nod to continuity, that), Starfleet orders Picard and Riker to go head-to-head in a simulated battle as part of a new program to develop tactical skills among Starfleet crews, which Picard notes "is not a military organization." Along to observe is brilliant war strategist Kolrami (Roy Brocksmith), from a race of strategy masterminds that no one has dared challenge for centuries. In an observant detail of one sizing up someone else, Worf says the lack of any direct challenge essentially invalidates the reputation. (The theme of the show is sizing up people and situations.) Riker takes command of the derelict USS Hathaway to oversee a crew of 40, hand-picked from the Enterprise. He and his crew must improvise a way to compete in a battle where they are outmanned, outgunned, and, well, out-everythinged.
I enjoy stories about tactics and cunning, and this is a good one from TNG. One tactic involves Wesley playing the innocence routine "to shut down a science project" in order to steal some antimatter from the Enterprise. Another involves Worf creating an illusion that looks like something real (a Romulan Warbird) in an environment that's supposed to be all simulated.
There's also a subplot where Pulaski sets up a match of Strategema between Data and the arrogant Kolrami (Pulaski hopes to deflate Kolrami's ego), and Data ends up losing. This sends Data on an over-analytical search through his systems to find the "problem." The scene where Picard sets him straight is classic Picard — thoughtful, firm, reassuring.
The show's plot twist is that a real Ferengi ship shows up in the middle of the simulation and opens fire on the Enterprise, leading to a real test of improvised tactics. Armin Shimerman makes another appearance here as yet another Ferengi. (Another cameo I found amusing was by Glenn Morshower — the always reliable Aaron Pierce on 24 — as Ensign Burke.) Honestly, I could've done without the Ferengi altogether. The episode cunningly distracts us: By having the Ferengi interrupt the war games between Picard and Riker, the story doesn't have to offer up a resolution in which one of them actually wins. I for one am curious: Who would've won this battle simulation, and what would that have meant?
Perhaps the only satisfactory outcome would've been a draw. The story saves that for the Strategema rematch between Data and Kolrami. The payoff has Data saying, "I busted him up," which goes down (or at least should) as a classic Data line.