FORTUNE — Just how thin can a computer get? Arguably not much more than Apple’s new iMac. It is incredibly slim.

When Apple (AAPL) took the wraps off the new desktop, many thought the iMac a two-dimensional mock-up — not a real product. But real it is. At its thinnest, near the computer’s edge, the iMac measures just 5-millimeters thick. A few years ago, this could have been mistaken for a standalone flat-panel display. But the new iMac is a powerful all-in-one that should meet the needs of all but the most demanding of users.

To get it so svelte, something had to give, and that something was the DVD drive. That Apple dropped it wasn’t much of surprise. The company has been moving toward optical drive-free products. (Exhibit A: the newest MacBook Pros.) For people who download or stream music and video, it’s a non-issue. For those who still own DVDs and want to watch them on their computers, the iMac isn’t the ideal solution. Sure, there’s a $79 external SuperDrive that connects via USB cable, but that means shelling out extra for — let’s face it — a feature that still comes standard on most PCs. It also means messing with the iMac’s minimal-looking set-up.

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Our review unit was a 21-inch inch iMac with 3.1 GHz quad-core i7 Ivy Bridge processor, 16 gigabytes of RAM, a 1 Terabyte “Fusion Drive,” and a dedicated Nvidia GeForce GT 650M graphics card. That’s way more horsepower than most users will ever need. To wit, with a 21-inch external display hooked up, 8 apps humming, 20-plus Safari browser tabs open, and high-definition video of Netflix video streaming, the new iMac never stuttered.

The same goes for more trying tasks. We didn’t go so far as to measure “frames per second,” or fps — 30 being decent, 60-plus being great — but hours of crawling around the gritty battlegrounds of Call of Duty 4: Modern Warfare yielded nothing but buttery-smooth gameplay. The iMac’s fan fired up, but remained quiet, much quieter my 13-inch MacBook Air when pushed.

The display itself is great, though it’s not a ultra-high resolution Retina. If you’re used to a computer with a standard display, this is a non-issue. But if you’re using one of those newer MacBook Pros, you’ll notice the pixels. Given Apple’s huge push for Retina in its newest notebooks, phones, and tablets, a Retina-less iMac was disappointing at first. But otherwise, the iMac’s display is excellent: viewing angles are very wide, and colors come across more accurately than the $250 21-inch Dell display I use as a second screen. Apple also used a new manufacturing process so iMac users will see up to 75% less glare. Whether or not that’s true, glare and reflections were never an issue here, despite the fact my desk at home sits in front of three large windows.

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Something else new to the iMac is what the company calls a “Fusion Drive,” which pairs 128 gigabytes flash memory with a traditional hard drive. Some PCs have offered this hybrid-type feature for a while now, but it’s a first for a Mac. It works like this: the first 128 gigabytes of apps, media, and so forth are stored on much-faster flash memory. Once stored data passes that capacity, the Fusion Drive and the iMac’s operating system manage the data between the two types of storage. Frequently accessed data is prioritized and stored on the flash memory; less-often used data is stored on the hard drive. In theory, this should mean storage speeds approaching — though not quite in line with — a computer solely decked out with flash storage. After transferring tens of gigabytes of apps, documents, videos and music onto the new iMac, everyday performance still felt very snappy. Fusion doesn’t come cheap, though, nor does it come standard. The 1 terabyte option, to start, adds a hefty $250 to the overall price.

If there’s anything to pick at, it’s the speakers. They’re nowhere near horrible, with clear, loud audio. Yet that skinny aluminum body does little for bass response when playing movies or songs like Skrillex’s club-friendly “Bangarang.” In those cases, a separate pair of speakers aren’t just recommended — they’re perhaps mandatory for audiophiles.

That’s not to diminish the new iMac as a whole. Although some units, marked as having been “Assembled in the USA,” sparked talk that Apple was manufacturing more of its computers in the states — speculation that was debunked earlier this week — the new iMac still remains a notable addition to the product line. It is the biggest iMac product redesign in years and a largely successful one, provided some users don’t mind shelling out a little extra for the optical drive or overlooking this generation’s omission of Retina Display.