A major part of this episode takes place in a year that differs from the one the main storyline is set in. But most of the characters are there, though there are of a different age. The writers did a good job of telling who is who. They used multiple methods to achieve their goal, one of that is a montage where both the older and the younger self of a character is doing mostly the same as the other one, showing both at the same time via picture in picture.
A lot of the flaws of the first two episodes have been reduced, but not completely removed. There is still blatant exposition at some points (because they basically had to introduce every character again), and some flawed dialogue as well.
But in general, this episode is by far the best one yet, coming pretty close to a true masterpiece of german movie and TV-production!