We got two stories here. Jerry and Elaine with their BO issue and George and his encounter with lesbianism. Kramer kind of bounces around (like in many episodes). The BO story is extremely funny and find its way to entertain throughout the 20 mins but there's something missing and that is realism. This is the primal story that would fill the majority of the last three seasons of Seinfeld. It's definitely funny but you can't relate to it and that makes it feel out of place in this season. Season 4 is maybe the more realistic season (with 5 around there) and it is not only because of the probabilities of the events that happen but also for the sick attention to detail that Larry David has for human customs. This story has nothing to do with that. Jerry's car gets really smelly and then that smell gets attached to Jerry and Elaine and it just won't come off. And to make it worse we do actually get a human story with George's storyline. So the contrast is even more delimited.
George's story is great. We get more insights on his persona by the way he reacts to lesbianism and we get some funny moments with the video rental store. That's human customs.
So yeah, it's a hilarious episode but a big part of it feels out of place here just as the season opening episode did.