So episode 3 is side story material, nicely fit in to the continuity of the anime. This episode recounts events when Kirito first joined a guild and lied about his level being significantly higher to his fellow guildmates and the subsequent emotional scars that will follow. While most people are saddened by this episode, I’m surprisingly very indifferent about this.
Now explaining this episode in my opinion through an MMO perspective, the reason behind this is that the level gap between Kirito and his guildmates were too big, so enemies set on Kirito’s minimum level appeared and in effect Kirito was tanking the whole guild which made levelling and money quick for the guild because Kirito knew how to beat the monsters since he was a beater and knew the safe grinding areas. That last dungeon before his guildmates were slain in my opinion were set only to Kirito’s level and the mobs are too many, thus the guild was slain. This is the most logical explanation that I could come up with.
I find that the guildmaster committing suicide was stupid. From a purely writing perspective, many other things could have happened such as the revenge plot and other things but he just had to commit suicide which felt very cheap and convenient in my opinion.