In another loop Subaru is driven insane from the torture he receives from Betelgeuse, who rips apart Rem in front of his eyes piece by piece.
This insanity lasts a whole loop as Rem tries to carry Subaru who has turned into a drooling madman and make back to the mansion. At the end of this loop, the two are again captured and tortured, but this manages to snap Subaru back to sanity thanks to his anger.
After many deaths and revelations Subaru starts to formulate plans to save everything. He works to redeem himself in the eyes of everyone who shunned him.
He eventually wins the trust of several Queen candidates, and forms an alliance with Julius, the knight he lost duel to, Wilhelm, an elderly swordsman under Cruche, and beastmen mercenaries working for Anastasia (another candidate).
The group heads out first to destroy the White Whale who is blocking the passage to the mansion (~30 chapters dedicated to this). Wilhelm has a beef with the said Whale, for losing his wife many years ago.
The battle is very fierce and those who were eaten by the whale are ERASED from the world. History, memory of them, everything. No one, not even family, remembers them from ever existing. However, for some reason Subaru can remember them.
But after several deaths and loops, the group finally downs the whale.
Subaru's save point is moved (it seems killing the whale was an objective).
Now Subaru heads the allies to face Betelgeuse and the Cult of the Witch.
They lose several times, and everyone killed, but each time Subaru learns more about the Bishop and plans his tactics. The insane Bishop has the power to manifest invisible "Hands of God" that can kill anyone without them ever seeing them.
After many bloody battles, Subaru and his allies is victorious and Betelgeuse is killed.
It's the best possible outcome, or so it seemed.
Subaru wins back the trust of Emilia, but learns a shocking truth... she doesn't remember who Rem is.
He rushes to go see Rem, to find her comatose and no one remembering her.
Rem and Cruche has been attacked by Bishop of Gluttony. Rem was eaten and "erased" from the world, whereas Cruche's own memory was lost (others remember her fine).
Not even Ram, Rem's own sister, remembers who she is.
Rem was the only person that stayed at his side with unwavering trust and devotion, so this devastates Subaru who had just managed to recover from so much averted tragedies.
Moreover, after becoming romantically involved with Rem, Subaru despairs and commits suicide.
But when he wakes up, he realizes the "save point" had moved forward after defeating Betelgeuse, the Bishop of Sloth, and since Rem was attacked before that time, it was now impossible to go back in time to save Rem.
So many revelations about this world, Subaru's curse, and the secrets of the Witches are revealed or hinted in this arc.
But in the end of it all, it still only results in sadness.
Extra Notes:
1) At one point in arc 3, Subaru can't take the suffering anymore and decides to forget everything and run away with Rem.
He soon changes his mind, but this alternate continuity is a "what if he didn't change his mind and did run away...?"
They live happily ever after with two children.
2) Rem brings up how she loves Subaru and wants to be with him, and due to her amazing support during the ordeal, he seriously considers it but tells her he still prioritizes Emilia.
Rem is alright with this and will do her best to convince to take them both, and of course Subaru will give it a shot but will abide by whatever Emilia decides on.
So once the fight is over and everything's peachy, he brings it up to Emilia on their way to rendezvous with others including Rem.
Except Emilia has no idea who this Rem girl is, and no one else does either, and he later finds her in a coma with no one else knowing who she even is either.
The first time Subaru sees Rem in coma, he kills himself immediately. He resurrects pretty much right before that point, and this is when he realizes he cannot go back in time to save Rem anymore.
3) Due to Beatrice being in a different dimension at the time, her memories of Rem aren't taken away.
However, once she stops staying in the library, she does forget Gluttony's newer victims.
Arc 4:
Rosewaal basically forces Emilia to undergo a trial she has no way of overcoming without Subaru's help.
Emilia constantly mentally breaks in this arc.
There's also loads of other fun things. Like dealing with the mansion (Beatrice) getting attacked while they're away, a swarm of Gluttony rabbits (imagine a locust swarm, but of rabbits that are super deadly and can't be killed unless you kill them all at the same time) that need dealt with.
Not to mention Rosewaal himself clearly being an enemy.
Subaru gets to see a what-if segment of what might have happened (the person showing him these doesn't know if they're parallel worlds or really just the world calculating what would have ha