I share the mild trepidation at selecting the greatest of all sequels. The gods do not look kindly on hubris, after all. But perhaps I can venture a timid opinion without tempting fate too far.
It had not occurred to me until reading the comments on the post linked above, but The Lord of the Rings is a species of sequel. I am reluctant to choose it, however, because it seems too easy to praise and its virtues are well known. So I shall choose another.
In the original reckoning of The Chronicles of Narnia, The Horse and His Boy was the fifth book. Chronologically, it falls inside the first written book, The Lion, the Witch, and the Wardrobe. In the more recent collections of the series, the volumes are numbered in story chronology instead of authorial chronology. I agree with those who think this is a mistake.
Briefly, this is why. When Lewis wrote the tales, he did not have it in mind to write the subsequent books, so each was written with what had already been told in mind, and the world and history expanded from there. To read HHB right after LWW fails to provide any of the set-up that Prince Caspian or The Voyage of the Dawn Treader or The Silver Chair contain. HHB contains references to these books. Further, the deliberate introductions of Calormen and Archenland are made in other books.
But all that to one side. The reason this is this best sequel it's that it so dramatically expands the world of Narnia. All the other books (except VDT) take place solely in Narnia. The characters are Narnians and children from our own world. But HHB is in other countries, and mostly about native characters. Only a few pages even venture into the borders of Narnia. There are hints of even more countries away to the south. We see and learn about Calormene society. Of all the books, this is the one that makes me want to live in and explore that world.