The discussion centers on the understanding of lone pairs and bond shifting in the context of the reaction between C2H7O and water. The oxygen atom in C2H7O is described as having three bonded electrons and two unbonded electrons, leading to instability. When C2H7O reacts with water, water acts as a Brønsted base, accepting a proton (H+) and forming H3O+. This reaction results in the production of ethyl alcohol and H3O+. The explanation clarifies the role of lone pairs and bond shifting in this chemical process.