Davy Back Fight arc was a huge part of the character development. Luffy or the Strawhat crew hadn't faced these kinds of things earlier.
Like when Foxy stole that horse and challenged them to davy back fight, normally Luffy and the rest of the crew would just beat the living crap out of the Foxy pirates and get the horse back by force. But since the Davy Back Fight was a traditional Pirate game, then Luffy chose to honor that tradition and put the rest of his crewmates and himself at risk of losing everything(pride, honor and stuff).
In the end, Luffy did whatever it took to get his crewmates and the horse back, while still following the rules of the Davy Back.
It also shows how much of a genius Luffy is when it comes to battle, and the rest of the strawhats too. Every event was set up so that the Foxy pirates would win, but even through that, Straw Hats still won. And in the last fight too, Luffy was at a complete disadvantage, because the whole ship was set up with traps for him, but he still figured a way to beat Foxy.
In depth, its a really good arc.