Shot almost exactly a decade ago, "Tale from Midnight City" was among the very first machinimas to convince me that the genre -- created in Second Life, in particular -- could become a full-fledged art form. It's also a time capsule for the state of Second Life in 2007, and a testament to Lainy's artistry, working around the limitations back then to make some seriously impressive. Read my 2007 article about it here.
I'm planning, by the way, to highlight other machinima masterpieces from my massive archive. If there's any classic you remember, please post links in Comments!