Holmes apologizes for his dramatic entrance and for the whole fake-death thing.
Watson excitedly greets his formerly late-lamented friend and demands the down-low on how it is that Holmes is alive.
The murder of Ronald Adair caught Holmes's attention though, and he returned to London.
He came back to his old house on Baker Street, which Mycroft had maintained for him, and startled his housekeeper, Mrs. Hudson. By "startled," we mean "nearly gave a heart-attack." Oh, that Sherlock Holmes.
That night Holmes and Watson head out just like old times to solve some crime. Or stop some crime. Watson doesn't really know what they're up to, which is also like old times. He's just along for the ride.
They don't go to Baker Street, which surprises Watson.
Instead the two take a round-about route to some dark empty house.
Once inside Watson sees that they are across the street from Holmes's house. It's a stakeout!
Watson is amazed to see Holmes's silhouette in the window of Holmes's house.
Holmes explains that it's a wax dummy.
He's trying to fool the most dangerous member of Moriarty's gang, the rock thrower, into revealing himself tonight so they can catch him.
So the two sit for hours and watch the house. Nothing happens.
Watson notes that the silhouette moved and Holmes says duh. He arranged for his housekeeper to move the wax dummy occasionally so that it wouldn't look like a wax dummy.
They wait some more.
Finally a man sneaks into the dark room where Holmes and Watson are hiding.
Mystery man pulls out a weird looking gun and fires across the street.
Then Holmes jumps out and tackles the assassin.
Some cops swarm in. One of them is an old buddy of Holmes named Lestrade.
Holmes closes the blinds and Lestrade lights a candle, revealing the mystery assassin.
It's Colonel Sebastian Moran, who used to be a successful "big game" hunter, meaning that he went around killing elephants and tigers and whatnot.
Moran refuses to talk to Holmes and tells the cops to take him away.
Holmes then does his usual summing up routine, which is now featured on every detective show on TV. Holmes tells us all about the fancy gun that Moran used and says that he killed Ronald Adair with it. Then he tells Lestrade to take credit for this case since he doesn't want his involvement to be known.
Watson and Homes return to the Baker Street house.
Mrs. Hudson takes the shot-up wax dummy away. RIP wax dummy.
The two men chat about Moran, and Holmes gives us a low-down of Moran's personal history.
He was a gambler and Holmes theorizes that he was cheating and Adair threatened to expose him. So Moran killed Adair before he could talk.
With Moran in jail, Holmes can now safely return to life and resume his detective business in London.
Fun with Maps: Check out Holmes's address on a map! Go here.
Also, here's an awesome floor plan of Holmes's place.