Alright, calmed down now. I shall now administer 50 cc's of what the f*** is going on, as far as I know.
In the beginning, there were two happy children, Nanami and Souta, prince and princess. They grew up inseparable, in Bladefield, tiny European country that for some reason still has royalty that means a damn. This particular line of still somehow politically relevant royalty descends from their magical founder/warrior, who established her kingdom after a young man bravely sacrificed himself to become a magic flag of light against monsters of some sort or another. Presumably, sexy times occurred before he became a flag, starting a royal bloodline. So they've got magic flag in their blood so to speak.
Alright, flash forward. So Bladefield is a peaceful little European country, that decides they want to go full blown evil and establishes "the council of seven virtues" as their internet intelligence division. As they start worming their way into every network on earth, they create the ANGELTHING's to aid in their quest to rule the internet. Using the ANGELTHINGs, they begin manipulating the worlds data to benifit Bladefield. Then a classic scifi problem arises, the ANGELTHINGs suddenly start asking themselves, "why the hell do we have to take orders from you meatbags?" itshappening.gif They keep up their intrusion task, but now they're not doing it for Bladefield, they're just conquering every networked computer and object they can get into, and they're very good at getting into shit.
Next, the Council of Seven Virtues, realizing they just plugged in the overlord, comes up with a brilliant scheme to fix all the shit they just f***ed up. They decide to use their magic flag blooded prince to fight the ANGELTHINGs. Just one problem, magic flag blooded prince isn't too magical. So they come up with ANOTHER brilliant idea, they'll just run countless simulations of the entire world to try and awaken his magical flag powers! Brilliant scheme. Why are they even in trouble in the first place with critical thinking like this, I swear.
ANYWAYS. They plug souta, and start building the simulation. Now Princess Nanami does not like this plan. If you recall the fairy tale, magic flag boy sacrifices himself to save the kingdom. This does not sit well with her, so she follows him in. Now Zero is the black masked lady from the council of 7 geniuses who created skynet. She realizes what's happening, and works some computer magic to wipe out Nanami's memories in the simulations. Now Nanami is apparently much better at internet than Zero, because she manages to split herself into two parts, one is the good little NPC'ish girl we see in most of the series, and the other is the part that knows what's going down.
Do you follow me? Yes? No? Maybe?
Zero locks up the nanami that knows whats going on in a hardrive or something, and walks off because "HA! NOT LIKE I f***ED ANYTHING UP WITH THIS HERE COMPUTER DOOHICKY BEFORE NOW!" to complete her master flag raising plan. Nanami, being the computer genius she is, escapes confinement.
Now we're going to go back just a bit, while the nanami drama is going on, in the simulation that correctly awakens Souta's magic flag powers, he met with SAKURA, or the heart thing, I don't remember exactly, this is a lot to process. Either way, the pink haired girl he played chess with and gave him his powers. I have no idea who she is. What she does. Why she exists, and why it had to be random chance she exists. Anyways, she gives him magic flag powers. We then procede through the parts of the show that make some sense, he lives a life of horror seeing flags, meets NPCanami and the gang, ect... This is where the "I remember a sister nobody else does" part comes in. This is a residule memory from real life. He and Nanami were very close siblings, so even though she doesn't exist as his sister in this simulation, he still just sort of remembers her.
Now Zero is delighted and has her magic flag guy, so she doesn't turn off the other simulations. I don't know why. Maybe she minimized them and thought that was exit. So she sends shorthaired blue girl who fills the cold tsundere slot in the harem. Shorthaired blue girl is supposed to fill Souta in on what's happening, and why, BUT HIS MAGIC FLAG POWERS ARENT FULLY AWAKENED. Remember that, he isn't "matured" yet or something sappy like that. This is where she shows him parallel worlds, in particular, one where he wasn't on the boat, and his teacher was. He then dethrones himself as the most important person in that world, and then they jump back to the correct simulation.
Got that? The other simulations are now pointless. They serve no purpose, forget about them.
This pisses the digital simulation version of SAKURA, (pink haired heart girl or whatever that gave Souta his magic flag powers) So in order to do things like SHE wants to, she drops in and wipes blue haired cold tsundere girl's memories before she can drop the big bombshell about the master plan. Zero sees this, and decides its better to play along with Sakura in order to save the world from the menace that she helped create.
BACK IN TIME AGAIN WE GO! BACK TO REAL NANAMI! Remember her? She escaped from the harddrive of no escape that the hacker genius Zero trapped her in and then nanami walked out of? Anyways, she doesn't want to get caught right away trying to help Souta, so she designs a clever plan. She changes tiny bits of the simulation to edit NPC's to create THE HAREM! And lines it up with the whole Knight/cleric/ninja thing so that they too, will have magical powers in this digital world when "awakened". She hides these magical powers in the box down below QUEST DORM.
NEXT UP, she needs to hide herself, this is where Ruri comes in. Ruri is a robot. She has no personality, so Nanami hides herself within Ruri like a time bomb. Now this actual personality inside triggers Ruri to develop a personality of her own, thus creating the ruri that we all know and love. Ruri is then given the directive to reunite REAL Nanami with the NPC version of herself when necessary to help Souta.
Lets take a quick breather and talk about WHY?! Well, in the story, as you remember, the magical flag boy sacrifices himself because of his powers. Zero plans to do this with Souta. He is supposed to die fighting the ANGELTHINGs in order to defeat them. Nanami does not like this outcome, so she wants to "alter fate" in a sense by giving Souta a team to fight with him, and hopefully defeat the ANGELTHINGs without Souta getting martyrd. That may be the most sensible motivation for anything in this entire series.
Back into the morass! So Real Nanami's trap is set, and we the audience get the middle of the series, stuff happens, flags break, ect... Then, in Episode 11, SOUTA AWAKENS AS DIGITAL TATSUYA CHRIST OUR LORD AND SAVIOR! Unfortunately, his gary stu powers are too much for Zero's spaghetti coded simulation. So she appears and finally tells him whats going on and how he's going to save the world. Souta is then removed from the simulation. HOWEVER, remember how Souta remembered that he had a sister? Well Nanami remembers Souta for the same reason, they were too close for Zero's slipshot coding to wipe their memories. Time passes slowly for her before she decides to do something about it.
Meanwhile, OUR LORD AND SAVIOR SIR GARY OF STU is kicking ANGELTHING ass all over the world across the internet. He is the keyboard warrior we all aspire to be. Anyway, he starts to slow down, Zero realizes that its time for her trump card, make Souta into an actual magic flag. So she has him retreat to the last un-corrupted server on earth, the Bladefield home server. Just like the story. One last bastion against hordes of evil darkness.
Back in the simulation, that's still running. Wasting processing power. Nanami finally snaps and kicks down Souta's door as we saw in the episode. Ruri's timebomb "detonates" and she reunites NPCanami with the rest of her personality. So we get the white background explanation of what's going on. We also get glimpses of what I assume is the real life Souta wedged naked into a wiring closet somewhere. I digress. So Nanami, now finally awake and together, gathers up THE HAREM that she had prepared, and leads them down to the magic box.
whatsinthebox!?
Their own magical digital medieval powers, corresponding to the whole knight/cleric you get the drill thing. And they ride to Souta's rescue to try and defeat the ANGELTHINGs without Souta having to go full flagpole. Which is where we are now.
I do not know why the ship appeared. It might be Sakura still f***ing around with things. Why she can escape the simulation of the world, when I assume some real world version of her exists is a mystery.
tl;dr CLUSTERf***