The first version of Windows to use WDM drivers! Check Wikipedia for information on what exactly WDM drivers are: http://en.wikipedia.org/wiki/Windows_Driver_Model
Many WDM drivers that were written to work in Windows 98SE still work in Windows Vista!
Out of all the "Windows 9x" versions, many consider Windows 98SE to be their favorite.
The original Windows 95 release didn't support things like USB, AGP, or FAT32. Windows 95 OSR2 did support FAT32 (and supposedly had limited support for USB and AGP), but it wasn't sold on store shelves.
The original Windows 98 was a good upgrade to Windows 95. It was the first version of Windows sold on store shelves that natively supported FAT32, USB, and AGP. Some people didn't like that Windows 98 came with Internet Explorer 4 integrated into the shell of the OS.
Windows 98SE came out a year after Windows 98 in 1999. It had some nice improvements such as support for WDM drivers and Internet Connection Sharing (it acted as a DHCP server).
When Windows Me came out, it didn't really support anything that Windows 98SE didn't already support. But what it did do was try to prevent people from using MS-DOS, had a flaky System Restore feature, and introduced all kinds of system stability issues to many people and ran slower than Windows 98SE.