The pivotal moment in Act 3, Scene 1 of A Midsummer Night's Dream is the moment in which Puck transforms Bottom's head into the head of a donkey. This is an important moment because it serves to characterize Bottom and to illustrate the central theme of reality vs. illusion.
Turning Bottom into a donkey serves to characterize Bottom through the use of an extended pun. Bottom is a weaver, and like the other mechanicals, his name symbolizes the work he does. In this instance, his name refers to the "bottom, or skein" that yarn is wound around ("Bottom (Character Analysis)"). However, while most scholars deny it, Cedric Watts of Sussex University argues that his name was also recognized in the Elizabethan era to refer to backside or posterior. In addition, a slang term for a donkey is an ass, which is also a slang term used to refer to, not only to the backside, but also to a particularly stubborn, ridiculous, and foolish person. Hence, turning Bottom into the proverbial ass is an extended pun on his name, making his name refer to three things at once: a skein of yarn, the posterior, and a stubborn and ridiculous person. Bottom can be characterized as a stubborn and ridiculous person because he is conceited and has visions of being able to give a grand performance, as we see in his lines, "If I do it, let the audience look to their eyes; I will move storms" (I.ii.22-23). However, despite his vision, the reality is that he is too poorly educated and too unskilled to be able to give the performance he envisions, as we see in his rehearsal, which is why Puck feels inspired to characterize him as the proverbial ass.
Puck's characterization of Bottom as the proverbial ass also serves to illustrate the central theme of reality vs. illusion. As it has already been mentioned, Puck is pointing out Bottom's conceit and the reality that Bottom is actually an uneducated, unskilled, ridiculous performer. In addition, since Titania falls in love with Bottom as a donkey, this also serves to illustrate the theme of reality vs. illusion. In reality, Titania would never fall in love with something as grotesque as a man with a donkey's head nor would she fall in love with someone as ridiculous as Bottom. But Titania has been enchanted by Oberon; therefore, her worst fantasies or worst illusions have become a reality for her, which was Oberon's aim, as we see in his lines, "And with the juice of this [flower] I'll streak her eyes, / And make her full of hateful fantasies" (II.i.262-263).
Therefore, Puck turning Bottom into a donkey is the pivotal moment in Act 3, Scene 1 because it serves to characterize Bottom and to illustrate a central theme.