Warning: Spoilers ahead.
The ep starts with a bit of Ilulu’s origin story. She’s playing with humans as a child. She loves humans. Her dragon dad is actually okay with this. But for some reason, humans attack a dragon village. Her parents attack the humans in retaliation, but they die. So the dragons forbid Ilulu from befriending humans ever again.
Picking up from the last ep, Kobayashi realizes that she suddenly got male parts as a prank by Ilulu, but she’s not sure why. As soon as Kobayashi gets home, she sees Tohru and feels different. ...