This poem is helpfully structured into four parts, so I will use those parts to answer your question.
Part one establishes the character of the Lady of Shallot and also her setting. Throughout the poem, Camelot, which represents life and reality, is separated and opposed to the isle of Shallot, where the lady is embowered. Shallot could be said to represent illusion, art, or shadows. The life of Camelot is described, with the normal hustle and bustle associated with a big city. Likewise the mystery surrounding the Lady of Shallot is described, with only reapers working early in the morning hearing the song of "the fairy / lady of Shallot".
Part Two continues this opposition and the description of the real life of Camelot and how it is mediated to the Lady of Shallot through the mirror. It explains the curse that she is under if she looks at Camelot without using the mirror. Significantly, lines 71 -72 state: '"I am half sick of shadows," said / The Lady of Shallot.' This comes after the description of the sight of "two young lovers lately wed" - and foreshadows what will happen in Part Three with the arrival of Sir Launcelot and the Lady's decision to no longer dwell in her land of shadows.
Part Three abruptly begins with a picture full of life, movement, grace and beauty. Sir Launcelot appears, and is a sight so compelling and attractive (interestingly, critics have argues that the image of "his helmet and the helmet feather / burned like one burning flame together" is rather phallic) that the Lady leaves her realm of shadows to look down upon Camelot. As a response her weaving rips in two and the mirror "cracked from side to side", bringing the curse down upon her. This final stanza represents the climax of the poem, emphasised by the repetition of "She left...".
A nice bit of pathetic fallacy opens Part Four - a storm accompanies the Lady's exit as she find a boat and writes her name on its prow. She then gets in the boat and "like some bold seer in a trance" lets herself be taken by the river's current and sees all the sights that she has only seen before in the mirror. As she goes, she sings her last song. Finally, the boat arrives at Camelot with the Lady dead inside of it. It causes quite a stir, and the initial reaction is one of fear. It is only Sir Launcelot who is not afraid and asks God's blessing upon her.