It's finally happened, the first real interaction between the Red and Blue armies that doesn't have them on opposite sides of the canyon. And funnily enough, the first shared screen-time between two soldiers on opposing sides doesn't have any bloodshed in it.
This is probably because as stated in the last episode, Donut does not know that the Blues are his enemy, as he is "ready to fight some aliens", which explains why he walks up to them so nonchalantly, as he expects a store and can only find one other building in the entire canyon. Caboose, on the other hand, was told that the next person he saw that didn't look like Church, Tucker, or himself was going to be "The General". So while both rookies have been played patsy by their respective teams, it leads to them having this comedic encounter, which of course leads to Donut running off with the Blue Team Flag.
While that was the main source of entertainment for the episode, this analysis can't be complete without acknowledging the hilarity of Church's rage at the fact that Command sent them a tank with no one knowing how to drive it. It doesn't look like things will be dying down anytime soon, however, as Church's last minute processing of what Caboose tells him will no doubt lead to some frantic action in the next few episodes.