The irony of a movie like "Terminator 2: Judgment Day" is that it stands on its own so well that you forget it's a sequel. Nobody talks about the original to the same extent they do this one and if we are being honest, the less said about the later sequels, the better.
A large part of that "T2" success is because of the visual effects used that earned the team an Oscar. Unlike something like "Avatar" that is mostly CGI, only a fraction of "T2" is comprised of effect shots. The most famous of them all though is the T-1000 morphing sequence which cost over $5 million to produce over an 8 month period.
Not since "TRON" nearly a decade earlier had a film looked to change the game in the same way "T2" did and it was noticeable. Utilizing Industrial Light and Magic's "Cyberscan" (photo realistic CGI) technology, they projected a laser over the face of Robert Patrick, who played the T-1000 model and then they were able to build the 3D visuals over the scan.
They then paid extreme attention to how Patrick carried himself while shooting the scene and matched up his movements with the character's movements. Director James Cameron also borrowed the liquid effects from his 1989 hit "The Abyss" to fully round out the impressive scene.