It doesn't. For good reason...
"Why Skip Episode I?
Look, I'm not going to sit here and bag on how bad Episode I is. I'm not even going to try and act like Episode II is better or tell you Episode I ruined my childhood or anything like that. It didn't, it's just a movie that isn't very good.
The reason to skip Episode I isn't that it's bad, it's that it's irrelevant. If you accept my suggestion that Star Wars, the saga, is really about Luke's journey and his decision to accept his hero's burden by saving not only the galaxy from the Empire, but his father from the dark side as well, then you'll find that everything that happens in Episode I is a distraction from that story.
Seriously, think about it for a minute. Name as many things as you can that happen in Episode I and actually help flesh out the story in any subsequent episode. I can only think of one thing, which I'll mention later.
Every character established in Episode I is either killed or removed before it ends (Darth Maul, Qui-Gon, Chancellor Valorum), unimportant (Nute Gunray, Watto), or established better in a later episode (Mace Windu, Darth Sidious). Does it ever matter that Palpatine had an apprentice before Count Dooku? Nope, Darth Maul is killed by the end of Episode I and never referenced again. You may as well just start with the assumption that Dooku was the only apprentice. Does it ever matter that Obi-Wan was being trained by Qui-Gon? Nope, Obi-Wan is well into training Anakin at the start of Episode II, Qui-Gon is completely irrelevant.
Search your feelings, you know it to be true! Episode I doesn't matter at all. You can start the prequels with Episode II and miss absolutely nothing. The opening crawl of Episode II establishes everything you need to know about the prequels: a bunch of systems want to leave the Republic, they are led by Count Dooku, and Senator Amidala is a senator who is going to vote on whether the Republic is going to create an army. Natalie Portman is called Senator Amidala twice in the first 4 minutes of the movie, so there's no question of who's who."