The last 11 episodes of Sword Art Online compose the Fairy Dance arc, which adapts the third and fourth entries in the SAO light novel series and takes place primarily in the world of Alfheim Online. Unlike the series' first arc, though, this one alternates between events in the virtual realm and those going on in the real world, thus providing a broader picture of what's going on and expanding the context for Kazuto's actions quite a bit more. The focus also shifts away from Asuna as the lead female protagonist (she essentially gets relegated to a Princess Who Must Be Rescued role) and to Kazuto's “sister” Suguha. (She's actually his cousin, as Suguha's mother has been raising her sister's child from an early age, though neither of the kids knew about that for years.) Whether or not this is an improvement is highly debatable, however, as the second arc has both good and bad points compared to the first and in general.

In many senses the differences in the second arc help the series. The Alfheim Online setting is a fundamentally different creation from SAO, down even to some of the mechanics; it depends more on skill improvement than leveling and does not use fighting combo moves, for instance. Unlike SAO, it allows several different races and customizable character designs and includes magic use as an option; in other words, much more like a conventional fantasy MMO. It also allows all its characters limited flight capability – a thoroughly awesome option for a VR setting and one that allows an expansion of the type of battles that can be fought and the way they can be carried out. An emphasis more on interracial relationships and factional squabbling, with a single grand quest at the center that races compete to complete, also offers a striking contrast to SAO's survival mode set-up, thus reinforcing the distinct variety that ALO offers. Telling a single continuous narrative, rather than one interrupted by numerous side stories, in this arc also results in a smoother and better-paced story progression, and alternating between the game and real-world setting gives fans the contrasting views that many longed for during the first arc. Viewers also get a much greater insight into Kirito's background and motivations (he may still be fairly called a thinly-developed character, but at least there's something there now) and seeing Kirito loosen up a bit and actually engage in jokes in ALO is a welcome treat.

The differences also breed some new problems, though. The biggest is that the new game lacks the inherent danger and risk factor of the SAO death trap, and an attempt to replace that death trap aspect as the villain with a more literal, old-school, and completely over-the-top cad like Sugou is the second arc's biggest stumbling block. Introducing Suguha's unrequited love seems more like a play meant to pander to “Big Brother Complex” fans, though she does get some nice emotional development out of it and some very good scenes later on when the matter of her attempt to replace her misplaced love for Kazuto with Leafa's attraction to Kirito (who is also unknowingly her brother) blows up. Asuna also pretty much gets the development shaft after the late stages of the first arc had finally established her as a credible companion to Kirito. Also lost are the psychological implications of being forced to live in a VR setting for an extended period of time, though this is partly replaced by some of the real-world adaptations done for those who were stuck in SAO for years, such as a special school set up for students who were trapped in the game.

The similarities between the two arcs likewise both help and hurt the second arc. On the plus side, it still throws out plenty of gorgeous scenery, inventive fantasy cityscapes, and exciting action scenes. It brings back Yui as a significant supporting character and features cameos from many of the surviving SAO characters (albeit most of them do not come up until the final episode). It also continues to successfully combine an exploration of game elements and the spirit of the game with real-life issues. On the minus side, those who accused Kirito of being a Gary Stu character in the first arc will find plenty of additional ammunition here (though also some detracting points), Kirito is still a magnet for cute female gamers to an almost wish-fulfillment degree, and the overall writing is only better in spots. Game mechanics also tend to be conveniently ignored for purposes of dramatic license, but that is hardly a flaw unique to this series and not necessarily always a big problem; it does result in some neat dramatic effects, after all.

Technical merits are not a problem, however, as A-1 Productions maintains the same quality standards for artistry and animation seen in the first series; in fact, the visuals are arguably even a little sharper in places, as the flight capabilities allow for some neat perspective-shifting and top-down views and there are some very sharp CG renditions of hordes of opponents in the late going. The animation also continues to hold up well in the sometimes- very-involved action scenes and is further enhanced by sharp magical effects. New character designs also look sharp, although they also lead to a significant upgrade in fan service content; Suguha is rather busty, and on a few occasions the animation exploits that. That wouldn't be an issue if the SAO arc hadn't mostly avoided such content, however.

Musical themes used in this arc are mostly repeats from the first arc, with a sprinkling of minor new additions. Use of potent themes to back key battle sequences is not quite a strong, but the drop-off is not a big one. Fairy Dance also gets a new pair of opener and closer, both updated to reflect the new setting and shift in character focus; Suguha is exclusively featured in a closer backed by the solid song “Overfly” by Luna Haruna (the same singer who did the second closer for Fate/Zero), while the opener features most of the cast and the ALO setting in a production which has a similar visual feel to the first season opener but a comparatively lower-key song in the form of “Innocence” by Eir Aoi (who sang the first closing theme for Fate/Zero). The Japanese voice acting also stands up well, with Leafa/Suguha's Ayana Taketatsu acquitting herself quite well in some late emotional scenes.

The second major arc of Sword Art Online is definitely not without significant flaws, and the seemingly reduced threat level and transition to a more clichéd plot structure (and especially its cartoonish villain) may have cost it some viewers. However, it does add in some stronger interpersonal drama, comes to a satisfying conclusion, and still delivers on enough of the grand heroic spectacle that made the first arc entertaining to virtually assure that it finishes as 2012's biggest new hit series. Consistent quality writing may be required to make a good series, but it is not necessary to make an entertaining one, and the Fairy Dance arc just reinforces that.