What I like best is that a character has an external problem and an internal problem. Some stories have just external problems (villains, bombs, monsters), but those tend not to interest me.
External problems mostly just have to be cool and hard to solve, but internal problems have to make me believe them, really feel them. They can even 'seem' easy to solve as long as it can also make you understand and empathize with why it hasn't been solved.
For example, let's take the traditional romance barrier. X has been hurt in love before and can't confess their love for Y.
In a bad arc, they refuse to admit their feelings despite overwhelming clues it would be a good idea. When they get close, a random plot hook swings in to send them back for a few steps. Finally, the power of love wears them down until they confess and everything's great forever.
In a good arc, they refuse to admit their feelings for sympathetic and relatable reasons. Maybe we are on their side for most of the story, caught in the same misunderstandings. Maybe we see the depths of their mind, and even though we can't relate personally, our heart goes out to them trying to overcome their struggles. They grow slowly.
Finally, in my favorite kind of ending, the external flaw comes to a point. Maybe, as they've refused to admit their love, they're also running a difficult court case or fighting monsters. There is nothing like an ending that pushes both of these conflicts to their limits. Then, the resolution brings them together. The main character conquers their fears or their arrogance or whatever trait has been holding them back, and that is what allows them to solve both problems in one brilliant conclusion.
But it can't be an on/off switch. If you've been building enough to the moment, it can be the culmination of the progress they've made, but, especially in a first book, it can also be the start of something. Their first shaky attempt to embrace their flaws, admit their feelings, conquer their fears, in a way that gives hope for the future.