Essential X-Factor volume 3 is a bit of a turning point for the series, as Walt Simonson would leave the book following the Inferno.
The volume itself is a collection of two major storylines: The Inferno Saga (which is truncated to only include include two Uncanny X-Men tie-in issues) and the massive seven part "Judgement War" which takes the X-Men into outer space and traps them on a planet ruled by mutants that, unknown to the population of the planet, are about to be wiped out by the giant space robots known as "The Celestials".
Added into the mix are some one-off stories (featuring a rematch between the X-Factor and Nanny and her Orphan Maker, as well as a two-part story drawn by Art Adams that was to pay off a contest run a year beforehand where a lucky fan got to have his fan-created mutant character appear in an issue of a Marvel comic. There is also the completely out of place X-Factor Annual #3 (which should have been included in volume two and is stuck at the beginning of the book, effectively sidetracking the previous issue's cliffhanger).
A decent read but the Inferno has been reprinted countless times, leaving the main draw being the never-collected "Judgement War" storyline. A storyline that featured so many characters, that midway through Marvel had to put together a "Who's Who" guide to everyone midway into the series, something that was sadly omitted from this volume. It's omission is baffling, especially since the collection features the 1989 Marvel Handbook Update entries for Madelyne Prior and Mr. Sinister at the very end of the book for filler.