First time in 25 years the Tories have won a by election whilst in power. Bad night for labour, their vote share went down whilst being the main opposition party which must be unheard of!
It's a poor result for Labour, but the Tories threw the kitchen sink at this (300+ MP visits, 4 visits by the PM, and allegations that they broke the £100,000 spending limit) by-election and even they are admitting that the other parties votes broke towards them as an anti-UKIP vote. Although the boundary changes were in effect in the 2010 they've probably settled at bit more towards the Tories (a Labour leaning ward was removed and a very safe Tory ward was added) as this time Labour didn't have the incumbency effect.
I'm not saying it's a good or even ok result for Labour but it's not particularly devastating.