WARNING: The following article contains spoilers for the My Hero Academia episode "Deku vs. Kacchan, Part 2," streaming now.
Many anime live and die by their epic rivalries: Goku vs. Vegeta; Yugi vs. Kaiba; Naruto vs. Sasuke. In the case of My Hero Academia, it's Izuku Midoriya and Katsuki Bakugo, childhood friends turned rivals. But like all great rivalries, it isn't just how the two fight; it's also how their personalities and outlooks on life counter and balance one another. The two first fought early in the series, when the core conflict appeared to be Midoriya fighting to prove himself a worthy hero and Bakugo trying to establish his superiority.
However, the series has changed, a lot. The characters are in far different places than they were, and so a rematch is in order. Last episode, Bakugo brought Midoriya outside to the place where they first fought to confront one another again. And now, the rematch: Deku vs. Bakugo.
Where the Two Stand
To understand the gravity of this fight, context is necessary. Both boys have become heroes in their own right. Midoriya established himself in countless battles against villains such as Stain, the Hero Killer. Bakugo, in contrast, proved the No. 1 student in U.A.'s Sports Festival.
However, it's only thanks to Midoriya that Bakugo escaped the League of Villains and All-For-One. And, while everyone else in Class 1-A passed their Provisional Hero License Exam, Bakugo and Todoroki are the only ones who failed, despite being among the best students in the school. So even though Bakugo seems to surpass Midoriya in every respect, he consistently seems to be beyond him.
Furthermore, in the previous episode Bakugo revealed he understands how Midoriya gained his quirk, despite being quirkless all their lives.
Resisting the Fight
When the fight begins, Midoriya views it as fairly pointless. He attempts to de-escalate matters by trying to convince Bakugo the teachers wouldn't allow them to fight, or that it's against the rules. Katsuki responds by charging forward, and launching explosion after explosion.
Of course, the teachers see the fight take place, and would have stopped the battle in its infancy, except that All Might convinces them to let him handle the conflict. However, it seems the retired hero realizes that, in order to settle their differences, the two rivals need to confront each other, to allow their issues to rise to the surface and be confronted.
What turns the tide of the fight and motivates Midoriya is when Bakugo refuses to accept the young hero's help. Bakugo opens up by questioning why Midoriya, of all people, was granted All Might's quirk.
More importantly, Bakugo reveals he blames himself for All Might's retirement because the hero saved him from All-For-One. That fight cost All Might the last of his strength. So Bakugo, who always loved and admired All Might, feels doubly like a failure: He didn't gain All Might's favor and his capture led to All Might's ultimate defeat.
To counter that, Midoriya opens up about always admiring Bakugo, and viewing him as a goal to which to aspire. While Bakugo feels as if Midoriya had looked down on him, the opposite was always true: Midoriya idolized Bakugo.
The Winner Is...
The fight continues with some of the most epic clashes in the series, with the two brawling and unleashing their full abilities. Midoriya pushes himself to his limits, and unleashes a flurry of intense strikes, but Bakugo counters and narrowly dodges.
In the end, Bakugo unleashes an explosion that throws Deku to the ground. Bakugo pins Midoriya, and claims victory. But just then, All Might himself shows up to break up the fight.
Bakugo confronts All Might, asking why the No. 1 hero chose Deku, of all people, as his pupil. All Might explains that, despite lacking a quirk, Midoriya was the most heroic person he has ever met. When Bakugo admits he always wanted to be strong like All Might, and that he blames himself for All Might's retirement, the hero tries his best to comfort the boy. After all, All Might's loss of powers was a long time coming. He would've lost it sooner or later. Nothing Bakugo could've done would have stopped it.
The three of them resolve to keep the secret of One-For-All. However, All Might understands, now that the two boys have their feelings out in the open, they can become true rivals, pushing one another to become the No. 1 heroes around.