There's a new archer in town! It's someone in a black hood who shoots black arrows and kills people who Oliver's already dealt with, so it seems like a fairly redundant addition to Starling City. Detective Lance wants to keep this secret, because the city would panic at the news that there's a serial killer in town. A new one, I mean. In addition everyone else. This gets Detective Lance busted down to Sergeant and taken off the ongoing Vigilante Archer case, so he shares some evidence with the Hood.
When Oliver gets one of the Black Arrow's arrows, he takes it to Felicity Smoak, who's the only analyst anybody knows. She takes about thirty seconds to track down the manufacturers of these exceedingly custom arrows, but when Oliver gets there, it's a booby-trapped warehouse. Luckily, he has a bomb-tipped arrow to get out safely.
In civilian mode, Oliver is outraged to find that his family's annual Christmas party was called off when he and his father vanished five years ago. So he insists on holding a new one, but as soon as it's underway, the Black Arrow strikes again. This time, there are five hostages in a warehouse that's surrounded by explosives so the police can't get in. But Oliver has no problem zip-lining through a window and freeing them so he and the Black Arrow can fight. It's pretty much a draw, in that Oliver ends up with a concussion, a few broken ribs, and several arrow wounds.
At the end, the Black Arrow turns out to be John Barrowman! Yes! The same guy who seems to be the head of the conspiracy! And he also has Walter kidnapped right at the end of the episode, because he doesn't like Walter investigating The List. But apparently there's someone even above him, who first created the list and wrote it down in invisible ink in a bunch of notebooks.
In the introduction, when Oliver claims that his only goal on the island was "survive," I feel like he's leaving out all the intensive martial arts and language training he did. I've survived the last five years, but I didn't magically turn into a superhero. And now I feel like a failure. Thanks a lot, television show!
Once the actual show starts, A bald guy on a phone tells someone that something is a once-in-a-lifetime opportunity. I hope you like vagueness! Then he turns to the camera and asks if someone's come back for another pound of flesh. Then he falls, with three black arrows in his torso.
In the Arrowlair Oliver trains Diggle in knife fighting (because it's another thing that Oliver is an expert in and Diggle doesn't know anything about) and they talk about Oliver's been getting work done on The List between episodes. And it's Christmas, which Oliver forgot about because "there were no holidays on the island." This leads to him reminiscing about how his father used to put a tree in every room in the castle. Opulent! Diggle suggests taking the holiday off, because surely Oliver is in the nice column. Is he? I mean, set aside the vigilante behavior for a minute; he's kind of rude to everyone around him. And that's exactly the kind of behavior that Santa Claus objects to.
Back to the island! Yay! I like the island more, because it's crazier. And the Starling City plots are kind of repetitious, what with all the archery. Oliver wakes up in the cave as Yao Fe (the Chinese Archer) comes in with a dead rabbit and a canteen. Oliver whines about how he ran out of food and water days ago. Then Yao Fe brings in the general who was interrogating him in that tent a few episodes ago. Oliver's way home is apparently this guy's carotid artery, although it's not clear how that would work exactly.
Back in the present day, Oliver comes home and compliments Thea's clothing. She explains that she dressed up because Moira and Walter are having a dinner party. They should have a schedule posted so everyone in the family knows about that sort of thing. Oliver complains that there are no Christmas decorations up, although he didn't even remember Christmas in the last scene. Come to think of it, he watches the local news constantly, so he really should have noticed the endless Christmas fluff stories. Oliver is particularly distressed that there are no candy canes, because he and Thea used to have a thing they did with them.