"What's Love Got to do With It?"This episode answers a lot of questions.
Bob's illness is the result of his fusion with Glitch. Because Glitch was damaged by Megabyte way back in "Web World Wars," the fusion was imperfect. If Bob continues using his keytool powers, he will die.
Hex is now officially a sprite. It appears that she's lost all her powers except for one: The ability to control nulls. She has used this power to sort of bring back Welman Matrix (Dot's father).
Turbo is now a prisoner in Mainframe. Bob attempted to cure him, but was only partially successful. He's now sort of in control of himself.
Mouse and Matrix have been infected by Daemon. They went to the supercomputer to rescue AndrAIa and Ray (he's apparantly still alive, but hasn't been seen yet). Now that Mouse has been infected, odds are that Daemon will be opening Mainframe to the Net.
Daemon is finally showing signs that she is not all that benevolent. Deacon (the Prime Minister Dude), upon telling Daemon they had been unable to break through Mouse's firewall, was destroyed and absorbed by Daemon.
Welman Matrix is sort of back. He's a humanoid null thingy with Nibbles as a head.
And we finally get the whole story of what happened to the twin city:
In the supercomputer Bob (still a cadet) and his superior (I forget her name, but Glitch was her keytool) were about to be rid of a virus by the name of Kilobyte. Unfortunately, before they could do so, he began to spontaneously upgrade to Gigabyte (remember him from Season 2?). He killed Bob's superior, then got sucked through Welman Matrix's portal. The portal couldn't handle Gigabyte's power, overloaded, and destroyed the twin city. The explosion also split Gigabyte into Hexadecimal and Megabyte. Bob persued Gigabyte to Mainframe, where he met Dot and so on and so forth. Nibbles is the null formerly known as Welman Matrix. Somehow or other, Megabyte found out who Nibbles was and kept him around since he was the closest thing to a father he had.
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"Kirito? I killed a thing and now it says I have XPs! Is that bad? Am I dying?"
-Asuna, Episode 2, Sword Art Online Abridged
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