Maine, off the I-95 Night. August pulls up in front of a diner. Emma seems to recognize it. She is agitated as she asks August, "What the hell is this?" She's not a character in one of his books and wants no more screwing around. "What the hell are we doing here?" August looks at her. "I think you know." It's the diner she was brought to, when she was first found. He shows her a newspaper clipping about her. When she says she thought the trip was supposed to be about him, he says it is. It's his story and her story. "That seven year old boy that found you? That was me." Commercial.
Maine, 28 Years Ago, Day. Magic blows a hole through the trunk of a big tree. Inside is Pinocchio. He hops out and takes a look around. In a lovely visual callback to Lost, a plane flies overhead. Of course Pinocchio is from the Enchanted Forest, so he cowers in terror. When he tries to climb back in the tree, magic knocks him unconscious, so unlike us, he doesn't have to suffer through a flashback of the last scene between him and Geppetto, you know -- the one we just saw a few minutes ago. When Pino regains consciousness, he rises to his feet. Magic whooshes all around him. When it's gone, a squalling Emma is in the tree. Pino takes her out and tries to hush her cries.
Maine Woods, Night. Emma says August can't be the guy who found her, because she wasn't found in the woods -- she was found on the side of the highway. August says he lied about where he found her. Emma says he's lying to her about everything. She says she's done listening and starts to walk off, so August tells her about the blanket she was wrapped in when he found her. Emma gives him a chance to explain why he lied about where he found her. August: "I lied to protect you." Emma: "From what?" August points at the tree and says, "That." He knows she's read Henry's book and knows about the curse and her role in it. He tells her he's Pinocchio and that they both came into this world through the tree. She laughs at the liar claiming to be Pinocchio, but of course he's telling the truth. She realizes he's the one who added the story to Henry's book and notes he's not a very good liar, since he didn't even bother to finish the story he added. August: "This is the ending and we're writing it, right now." Emma: "And how does this story end?" August: "With you believing." Emma tells him that's not going to happen.