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What is the dramatic importance of the coat episode in Arms and the Man?
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The coat episode in "Arms and the Man" serves multiple pivotal roles in the plot. Primarily, it allows Bluntschli to revisit Raina under the pretense of returning the coat, subtly hinting at his romantic interest. Additionally, it acts as a source of conflict, tension, dramatic irony, and farce as the characters, particularly Catherine, attempt to hide the truth about Raina's past actions. The hidden photograph in the coat pocket further complicates the plot, leading to familial pressure and a resolution in the form of a marriage between Bluntschli and Raina.
As noted by thanatassa, Bluntschli uses the return of the coat as an excuse to visit Raina. This, along with the discovery of the photograph, helps ensure that our lovers will eventually marry. But we can also answer this question in terms of the more immediate effects -- on the action, the characters, and the audience's experience. Shaw uses the coat to put Catherine's plans in jeopardy, pit her against her unwitting husband, and create farce.
The "coat episode" might refer to a couple of scenes. The first happens at the end of Act II, when Bluntschli tells Catherine he is returning the coat, and Catherine tries to keep the exchange a secret. She doesn't want Petkoff and Sergius to learn that Raina had loaned the coat to Bluntschli.
The second happens in Act III, when Petkoff complains that he can't find his old coat, and Catherine insists that...
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it is in the blue closet. Once again, Catherine is trying to conceal the fact that Raina gave the coat to Bluntschli. She wants Raina to marry Sergius and believes that Sergius will call off the engagement if he discovers the truth.
In both cases, the coat serves an important dramatic purpose. The loan is evidence that Raina sheltered Bluntschli and showed sympathy for him -- facts that Catherine regards as embarrassing and scandalous. Thus, the coat becomes the focus of conflict, tension, dramatic irony, and farce.
Conflict: Left to their own devices, Bluntschli and Petkoff would have acted in ways that resulted in Petkoff getting the coat promptly. But Catherine wants to return the coat in a way that doesn't arouse suspicions, so she is preventing this direct transfer.
Dramatic tension: Because we understand what Catherine believes is at stake, we feel tension. We're put on the edge of our seats. Will Raina's past actions be exposed?
Dramatic irony: The audience knows key facts about the coat -- and Bluntschli's previous visit -- that Petkoff and Sergius don't know. This creates dramatic irony, increasing our anticipation of what might happen next.
Farce: All of this conflict, tension, and dramatic irony is played for comic effect.
The coat in Arms and the Man by George Bernard Shaw serves as a plot device. It gives Captain Bluntschli an excuse to revisit Raina to return the coat without explicitly stating that he has a romantic interest in her.
The plot device of Raina putting a picture of herself in the pocket of the coat serves as a way for Shaw to make fun of the way romantic tokens are handled in melodrama. While in a melodrama or sensation novel, such a love token would have been pivotal in both plot development and relationship development, as the romantic Raina hopes, the pragmatic Captain Bluntschli doesn't even notice its presence.
The photograph does, however, serve to make Raina's father aware of the relationship, because he has found the photograph and is curious about why it is inscribed:
Raina, to her Chocolate Cream Soldier: a Souvenir.
Thus familial pressure and discovery prompt Captain Bluntschli to admit that he loves Raina and move the plot towards its resolution of a happy marriage between him and Raina.