Not counting the brief scene of Chryses's embassy, this is the opening situation of the first major scene in the Iliad, which sets the stage for all future conflict.
You can think about pretty much everything from the beginning of the book up to Book 16 as part of the conflict stage, because it all emerges directly out of (and is the fulfillment of) Achilleus's prayers in Book 1.
Up until now, everything has been going according to Achilleus's plan. At this point, though, things go majorly off the rails.
This moment marks the high point of the chain of actions initiated by Achilleus's refusal to fight for the Achaians. Everything that follows is due solely to Achilleus's own emotional state.
At this point, we are in a whole new ballgame, and we (and the gods) have no idea what Achilleus is going to do next – or when he will come back to sanity.
This scene marks the true end of Achilleus's inhuman wrath. By sharing a meal with Priam, he marks his re-entry into the world of ordinary human relations.
By showing us the reactions of Hektor's loved ones back in Troy, the poet lets us share in the emotional connection forged between Achilleus and Priam. This scene provides a vivid picture of the humanity of the Trojans, which we know will be violated when the city falls. At the same time, the image of the hero's funeral looks forward to the funeral of Achilleus, which we know will be coming from the constant foreshadowing of his death.