Excellent, with some quibbles--
Used by creative writing programs all over the U.S., this book pretty much covers everything about the craft. The contemporary short stories at the end of each chapter were really good, especially starting from Chapter 4 with "Mule Killers" by Lydia Peelle.
The main focus of the book is literary fiction and is admittedly biased against genre fiction with a convincing reason: "whereas writing literary fiction can teach you how to write good genre fiction, writing genre fiction does not teach you how to write good literary fiction." She further draws a comparison between realism and drawing of still life in painting, which analogy I found to be pretty compelling.
There are limitations to the book, however. First, there are other books that cover certain topics much more in depth, such as characterization (see Swain's Techniques of the Selling Writer), point of view (see Orson Scott Card's Characters and Viewpoint), description (Monica Wood's Description), story and structure (James Scott Bell's Plot & Structure and Donald Maass's books), revision (Self-Editing for Fiction Writers), etc. Also, the students are left to find all the topics implemented in the short stories at the end of each chapter, and yet it's sometimes difficult to pinpoint why exactly those stories were selected. Some guidance on how those stories used the techniques discussed could have been beneficial.
There are other shortcomings. In certain parts, the author also asks questions to the reader without providing answers, which is a shame because feedback is one of the most important factors in learning. The section on "psychic distance" was not entirely clear, especially the examples she gives to illustrate using abstract nouns and generic details increases a sense of distance while using concrete nouns and specific details increases intimacy.
Another misguiding thing about the book is when it covers the "golden" rule of contemporary fiction: show and tell. She pretty much tells you, "Show, don't tell," which is misleading because you should definitely show and tell where appropriate and simple vilification of telling does more damage than good, since telling can be a powerful tool, too, and she doesn't cover when it's good to tell and instead gives the false impression that telling is always bad--a preposterous stance if you stop and think about all those authors who use a hell of a lot of telling (Marquez, Chabon, Murakami) and still manage to be fascinating. She does, however, cover what makes good telling in a wholly different chapter under a different name: summary.
Also, she covers some topic and doesn't tell us any rule of thumb for knowing when it's good to use it. For example, she says filtering should be avoided. But a lot of stories--even those included in the book--use filtering at some point. When is it okay to use any technique she cautions us against? Should we always avoid them? But why are the stories she herself selected use them? So some explanation on that aspect of each technique would have been illuminating.
All in all, this is a really good book on writing, and I think everyone who is serious about the craft should read it.
Good stuff.