This is simply a solid, well-made film, produced on a low budget and directed by George Lucas based on his early student film of (roughly) the same title. (Which is included on the Director's Cut edition of the DVD.) Fans of "A Clockwork Orange," "1984," "Brazil," and similar films about oppressive bureaucracies will love this. It's a grim and gritty vision of the future in which people are controlled and monitored (think Big Brother on a large scale). Robert Duvall (THX 1138 being his "assigned name") breaks the laws of the world by falling in love, engaging in sex and therefore rebelling, placing him and his love in danger.
This is a very clear moral story and allusion to politics and so on and so forth. It excels as both story and study. Duvall gives a good performance (his breakthrough role in "The Godfather" would come next year) but the real surprise here is Lucas, who goes for a Kubrick-like edge to his film that really separates it from his later work. You won't believe this is from the guy who created Jar-Jar Binks.
If anyone accuses George Lucas of being the schmaltzy sell-out he has now become, direct them to this film in order to prove that, at one point in his life, he really did have a bleak outlook on life and the future, and it didn't start with the words "A long time ago in a galaxy far, far away...".