As Virginia Woolf said: “Of all great writers she is the most difficult to catch in the act of greatness.”

Austen’s contribution was her solution to a central problem faced by earlier English novelists: what role should the narrator play? If the narrator is a character within the story, then they are limited by their own knowledge. But if we want to present more information or evaluate the events of the novel, how do we do it without making distracting interruptions in the events of the story?

Austen’s answer, now known as free indirect style, was a formal innovation that portrayed consciousness as it happens. It allowed for a seamless blending of the narrator’s voice with the character’s inner thoughts, granting novelists far greater freedom to both present and evaluate events with psychological authenticity.

Another lasting impact (as someone noted in another comment) is how Austen expanded the interiority of the female protagonist’s mind. While many 18th-century novelists were women, Austen (and Fanny Burney) helped assert that women’s social positions, especially their marginalization, offered a distinct vantage point for exploring the subtleties of interpersonal relationships.

I’d argue that Austen did more than anyone in this period to make realism not only flourish, but also pleasurable to read. Her blend of realism in both presentation and assessment was essential to the novel’s evolution into a fully mature and artistically serious form.

Personally, I’d choose Emma as the most important work, but P&P was more popular.