Why is Naked Lunch by Burroughs so groundbreaking and recognized as a literary milestone by prominent authors that succeeded its publication? I've recently finished it and although I found it fascinating and very articulate at times, I fail to see any profound themes or literary significance that could be drawn from it.
Burroughs' Naked Lunch presents the challenge of having woven some very significant themes and social commentary up in a fragmentary and obscene narrative written in a disorienting style. Some of these profound themes & literary significance include:
Power, including state & governmental power, bureaucratic power, the power of biology to determine one's life, the power of addiction and sex, and the power of and over death. All of these get intermingled in a way that at the time was quite fresh.
Style: The book is written in a style that is intentionally colloquial and intentionally that of the outlaw. This really alienated the general middle-class American reading public at the time - not only was the book offensive, but it seemed to be written in some sort of dangerous code. Again, at the time quite sensational. Additionally, the non-linearity was much admired by numerous artists and authors and later appropriated in various ways.
Sex, vice, and violence: the novel has quite radical presentations of this subject matter for the time, including homosexuality. It was actually the last (text-only) book to be banned in America (banned in MA, then overturned in a rather significant court case, adding to the book's influence).
Satire: Certainly there is debate about which parts are satirical and which are not, but, for example, the political parties of Interzone satirize both our own political parties and the ways power and influence are conceived politically (mind-control, clones, eradication).
Social commentary & critique: The characters in the vignettes are largely satirical, and the vignettes themselves are often an intentionally hyperbolic gloss on American cultural attitudes towards sex, drugs, legality, and the status quo, written using various bastardized American dialects and discourses.
Philosophy: This book has, rightly or wrongly, provided a fodder for a number of philosophical positions, perhaps most notably the work of Gilles Deleuze and Felix Guatteri .
This list could go on, but these are the most salient ones to mention. If you ever look at the reasons authors, artists, and scholars give for citing Burroughs' Naked Lunch as an influence, you'll note the disparate range, everything from "I, too, like drugs" to "He changed the way I conceptualized the relation between the human mind and body."
Sixty years later, some of the novel's impact has faded, arguably because of the influence it had on other anti-establishment authors and artists, and arguably just because 60 years on, especially post-Vietnam and post-internet, social protest and the proliferation of "obscenities" are more mundane. It's definitely a fascinating book, and very articulate, as you said, but to what end? I'm not convinced Burroughs had an end in mind when he wrote (in spite of what he may claim in interviews), and that ultimately it's the brazen strangeness (for want of a better word) of the book that has acted as an influential and productive source of inspiration for some people.
Additional Reading, if you're interested: You also used the word "fascinating" - there is a very good book called William Burroughs and the Secret of Fascination by Oliver Harris that focuses on precisely what you ask about, covering what lead up to Burroughs' writing of Junky and Naked Lunch and the books' relation to America that lead to their volatile and influential reception.
Burroughs also further develops the themes in Naked Lunch to an extreme degree in The Soft Machine, Nova Express, and The Ticket That Exploded (the cut-up books). Then Burroughs refines them into a more readable, cohesive form in Cities of the Red Night, The Place of Dead Roads, and The Western Lands.