The Boddhisattva Kuan-yin, a goddess - in "male aspect" and so played by a man - looks for a truly holy man to go on the great journey from China to India to fetch the Buddhist scriptures that will save souls. He (er, I mean "she") finds Hsuan Tsang, a boy priest, who is so innocent he even prays for the soul of his father's murderer.
The boy is given the name Tripitaka and sets out on the journey, and on the way comes to Monkey's mountain prison. He releases Monkey and they travel on together. But it is not long before they are attacked by bandits and Monkey - enjoying his first fight for 500 years - kills them.
Tripitaka punishes Monkey by putting a golden band around Monkey's head. This was given to Tripitaka by Buddha and it causes the wearer great pain when the words of a secret sutra are spoken. With this Tripitaka can control Monkey, and this - along with Monkey's distinctive cries of agony whenever it is used - is a feature of the rest of the series.
They meet a dragon who eats Tripitaka's horse, but this dragon was waiting to join the journey in return for being saved from execution by Kuan-yin. When he finds out it was Tripitaka's horse he ate, he joins them and takes the form of a white horse to atone.
The episode concludes with them meeting a Night-Demon, the first of many demons they will meet along the way. Monkey defeats the demon with one of his many magic tricks and then they continue the journey, with Pigsy and Sandy still waiting to be encountered in the next episode.
This episode has a lot happen in it - indeed I would say that the plot with the Night-Demon, here the most inconsequential part of the episode, is the kind of thing that could form the entirety of a later, more typical, episode of the series.
This is overshadowed by the backstory of Tripitaka, his meeting with (and taming of) Monkey, and their meeting with the dragon horse, because these are important for the shape of the series as a whole.
One thing I still can't get over, even having watched the entire series before, is how Tripitaka - a male character - is both played by and dubbed by a woman. It makes me think of the character as female unless I really think about it to remember.