This is the height of the psychedelic phase. There would still be remnants of it on The White Album, but this is where their psychedelia reached its climax. Side 2 is just the Bomb, probably the best side in the entire Beatles catalogue.
Song for song this is actually a stronger release than Sgt. Pepper, I would say. A handful of songs here trump virtually anything off that album. Sgt. Pepper's has the edge for being a more cohesive album but even that's a bit overstated; Sgt. Pepper's is hardly the "concept album" many claim it is.
This is as underrated as a Beatles album can be. Abbey Road, Let it Be and Sgt Peppers get all the attention while this gem and Revolution are far more interesting and appealing, in my humble opinion that is, of course.
This is one of their best, it shows the height of their whimsical/psych-pop phase, and does it as well as (if not better than) Sgt. Pepper. Some people relegate it to the status of a compilation or soundtrack since it didn't get a UK release in the 60s, but It stands as a proper LP next to the other classics and should definitely be included in the canon