The plot explained

The following paragraphs explain the plot of the show as I understand it. However, these sections require a reading of the previous sections in order to fully comprehend the show.

Short version of events (slideshow)

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This slideshow details the events of serial experiments lain in a shorthand format that is easier to understand in case the previous sections overwhelmed you. I really do apologize for the typos and errors.

I have included a longer explanation of the show below detailing finer points in case that it's more your thing.

God

The first subplot to be covered is God and his intentions in the anime.

In the anime, the supreme God (or "sky father") wants his wife Gaia ("mother earth"), or the Earth's spirit (Wolksgeist) to awaken and evolve into a higher form called the Absolute.

This required that the earth first become conscious by connecting all human beings at a conscious level, and then fuse with "subjectivity", which is the totalilty of human past, present and future in the form of human memory.

However, humanity lost this collective unconscious due to industrialization, which interfered with the electromagnetic frequencies between the brain and the earth which allowed for the Collective unconscious to exist in the first place.

To attain these goals, God orchestrates events throughout the show, firstly by sending his enforcers, the gray aliens to Earth which will grab the attention of certain key players.

MJ12 and Aliens

The alien spacecraft lands in Roswell, USA. A secret society composed of high level government officials and scientists quickly swoop down on the crash, and through blackmail conducts a technology transfer in exchange for the craft and/or its inhabitants.

It is implied that this technology resulted in human cloning and nuclear weapons, but the main technology this secret society (called the Majestic 12 or MJ-12 for short) wanted to implement was something called the Wired.

Using network protocols, the MJ-12 wanted to build a global wireless network that will advance humanity to a new age of progress, eventually giving humanity the ability to communicate with other alien civilizations.

Eiri and Tachibana

Tachibana labs is one of the many companies commissioned by the Majestic 12 to create the Wired's protocol.

One of their head scientists, Masami eiri, on investigating the Wired discovers that a global "mind" (i.e a neural network) in primitive form was taking shape due to the swarm logic of many people at an individual level sending and receiving thoughts, feelings and memories through the Wired.

This is almost godlike in its potential powers, but Masami Eiri sees this differently and decides that the Wired allows him an opportunity to become the closest thing to God. He names this entity Living Artificial Intelligence Network, or LAIN for short.

Tachibana labs, under his directions, decides to undertake the LAIN project. The larger goals of this project is to make Masami Eiri a God in the wired through a series of experiments. Masami Eiri'scriteria for being God are:

To see everything and be everywhere at once (Omnipresence)
To be capable of doing anything (Omnipotence)
To know everything there is to know (Omniscience)

eEiri more or less tries to achieves this by hijacking this hivemind and taking control of its consciousness once the experiments are completed. In

order to achieve these goals, a couple of things are done:

A synthetic human called Lain Iwakura is cloned from Tachibana lab's human genome. The clone is genetically modified to have curious Instincts which steer it towards technology and rapidly accelerate its ability to learn these things.
In addition, the clone is modified to have an introverted, shy and weak willed personality. This clone with an Artificial General intelligence (AGI) Mind will form the Conscious mind of the Wired's Hivemind.
The Neural network will be connected to this AGI subconsciously, and over the course of the show Eiri will steer this hivemind's integration with AGI.
Eiri then decides to connect the wired to the entirety of the collective unconscious via the Schumann resonance.
This is done through altering the upcoming internet protocol 7, which determines how information flows through the Wired. What happens is that all of humanity can now be unconsciously accessed and manipulated via the Wired.
Eiri, in order to hijack the hivemind, decides to fuse his own memories and personality with protocol 7. What this does is make him a "second ego" in the consciousness of the hivemind, and should the hivemind's sense of reality be sufficiently weakened and disturbed, he can "take over" and become god.

The re-connection of the Wired and the collective unconscious also results in something else happening: The Wired now fusing with the spirit world. In SEL, the unconscious mind is innately connected to the world of spirits, so when the collective unconscious was interfaced with the Wired, it sort of allowed people's souls to manifest or get "stuck" in the Wired.

It is also implied that it was through the unconscious mind that God sent Eiri the idea of becoming god, which led to the events in the show.

Eir, on setting up other key events such as convincing his lab colleague Yasuo to foster Lain in order to proceed with the experiment, then decides to kill himself so that he consciously can only exist on the Wired.

Before this happens, the Majestic 12 finds out about the fact that Eiri altered protocol 7 and pressures Tachibana to fire him.

Tachibana labs, in order to cover up the plan, fakes their cooperation and decides to recruit the men in black from the MJ-12 to throw off their suspicions about the Lain project and Eiri's existence.

KIDS

15 years prior. Professor Hodgeson conducts the Kensington experiments, which involves the construction of the KIDS system.

This system collects the minute quantities of a parasychological ability called Psi, which in minute quantities can be used to alter the position of a coin in midair, or slightly see a couple of moments into the future.

Professor Hodgeson wanted to manifest godlike powers via the KIDS system, however the equipment wasn't able to handle the entirety of said psi and this resulted in a Psionic blast which killed all the children involved.

Professor Hodgeson decides to destroy his experiment so that it may never be rebuilt again.

The Knights

In order to enforce his will in the real world, Eiri creates a cult around him called the Knights of Eastern Calculus. The core beliefs of the Knights are that:

The Wired is more real than the real world and dictates the real world
The body is meaningless and is irrelevant
Eiri is their god and Lain is his prophet and will bring his prophecy to fruition.

Eiri, Tachibana and the Knights work together in secret to fulfill Eiri's larger goals. Throughout the show, multiple things are carried out by the Knights before the events of the show:

The Knights decide to target weak and lonely individuals in the real world by inducting them and convincing them that their lives would be better when they live on the Wired instead of the real world. These individuals then decide to commit suicide and live on forever in the Wired, an example being Chisa. In additon, multiple underage children such as Taro are inducted into this cult as enforcers.
They modify an existing game on the Wired called Phantoma and connect it to an existing children's tag game on the wired. In addition, they modify and improve this Phantoma game with elements from the blueprints of Hodgeson's KIDS system, which allows anyone who logs into phantoma to harness Psi wirelessly.
They work with Tachibana and Eiri to conduct brainhacking experiments such as Accela, whereby they kill people through remotely controlling their actions
They spread rumours and conduct disinformation campaigns on the Wired to throw off any scents on their trail.

The Knight's actions eventually result in the Wired reaching near saturation point from the suicides. In addition, the vast amount of suicides change the landscape of the Wired itself, remaining permanently recorded as red splotches in the shadows.

Events of the show

To broadly condense what exactly happened:

Chisa's email sets off Lain's obsession with God and the Wired. Her alienation from her peers leads her into the Wired seeking the truth.

Lain's obsession with the Wired eventually lead her to become an investigative journalist. She starts to publish her stories on a magazine called Hacker Havenz, where she earns the money to buy the equipment she needs to maintain her extensive relationships on the Wired.

Lain's powers start manifesting as hallucinations as her brain interprets this incoming information in a manner she can understand, and while she understands how to use them, she doesn't exactly understand what she is and what exactly is happening.

The knights create a memory alteration incident at Cyberia, while also brainhacking a young man who ingested their nanomachine drug Accela. The incident draws Lain and her friends to Cyberia. At that point, the Knights and Eiri set off their plan and brainhack the young man into shooting other people at the cafe. Lain's fear of blood traumatizes her, forcing the switch with WiredLain. This begins the shadow integration that Eiri desired from the beginning. WiredLain threatens the people behind the brainhacking, saying that since she's connected to every electronic device on Earth, finding them would only be a matter of time. The knights force the man to kill himself, thus covering their tracks. This begins Lain's obsession with getting to the bottom of what's been happening in the Wired and the secret forces manipulating it.

Lain receives a psyche chip in her shoe box, presumably planted there by some Knights member. However she doesn't know what it is. She asks her father, but the tachibana operative says no, which inevitably sets her off to find Taro in Cyberia. At Cyberia, Taro, a knights member, in accordance with the Knight's intentions , further destabilizes Lain's sense of identity by recalling the memory alteration incident.

The Knights and Eiri further move along their plans through baiting Lain's newfound obsession with the Wired. Lain begins to investigate a series of suicides prompted by the illegal connection of Phantoma with some kids game. However by logging into phantoma, Lain inadvertently gets hooked into a wireless version of the KIDS system devised by Hodgeson and integrated into Phantoma, thereby giving Eiri and her Psi powers. This also allows the Knights to Brainhack Lain. Lain then uses these psi powers subconsciously on the Men in black, who are operatives hired by Tachibana labs from the MJ-12.

Around this point in the show, the suicides that separate souls from bodies in the Wired are reaching a saturation limit, forcing excess souls to dissolve into the Wired. The knights use this as a perfect way to enact their cult beliefs as well as to get a way to monitor Lain through Mika. At some point when Mika uses her computer, the Knights brainhack her remotely and eject her soul from her body, whcih they then use to monitor lain and plant parasite bombs. Eventually, the excess souls clog up the flow of information in protocol 6 as planned by Eiri and Tachibana, forcing a global upgrade to protocol 7 modded by Eiri before his suicide by the MJ-12 behind the scenes.

During the same episode, the Knights decide to become Lain's online family, while the Tachibana operatives start to put some distance between them and Lain. This helps destroy Lain's attachment to the real world.

An incident where Lain notices a global hacking phenomenon with her in the sky and with children raising their hands toward her in cultish worship prompts her to investigate professor hodgeson and KIDS. This also leads her to the conclusion that the Knights are not her friend. However, this incident pushes her into Tachibana and the Men in Black.

Around this point in the, the shadow integration of wiredLain and bioLain is sufficient enough for wiredLain to remotely exist with bioLain at the same time, and devicelessly access the wired. Eiri tests this through appearing as another version of Lain on the headcam of a person fitted with Tachibana goggles, which with the help of the tachibana representative brings wiredLain out. With this, the border between the Wired and the real world begins to crumble as Lain is able to directly access the Wired from her mind without a NAVI.

Eiri, now masquerading as a rogueLain, peeps into Arisu's thoughts and spreads her crush on her teacher as a rumour on the Wired, which results in almost everyone looking at Lain being a peeping tom and rumour spreader. Lain is frustrated by the actions of an entity whose existence she is not entirely sure of, but on meeting Eiri as Deus within the Wired, Lain makes an attempt to erase memories.

However, since memories exist at an unconscious level she cannot access directly, Lain's attempt fails. Eiri then decides to double play with a hallucination that makes Lain believe she succeeded at some level while also destabilzing her identity with rogueLain. A false memory occurs where Lain has ejected herself from her body, allowing Masami Eiri to play the "real girl" whose body Lain possessed. Lain is frightened, wondering if she's human or program.

Lain's conversations with Eiri have left her doubting her true nature, and she is constantly pondering this. Immediately, an alien walks into the room and looks at her and then disappears. Lain takes this as her mind trying to tell her the answer as it has done many times before, but this is actually playing right into Eiri's hands, who transformed into an alien to do this. Lain will eventually accept this answer later.

On going to Cyberia, Lain is given a chip by the DJ, and she then realizes that Taro has been a Knights operative. On inviting him home, Lain confronts him, to which he confesses the truth that he is a Knights member and that they altered the memories of everyone at Cyberia via track 44 and the memory hacking chips. Her examination of the contents of the overwritten memory consisting of her false family break her spirit, making her susceptible to manipulation by Eiri's projected divinity. Eiri then makes his grand appearance.

Lain converses with Eiri as they switch bodies, but she ultimately rejects his proposition that he is god, and decides to invalidate his truth by destroying those who believe in it. More mind tricks and the departure of her parents force Lain to dox the Knights in a fit of emotional retaliation. The stunt allows the Men in black to assassinate Knight's members all over the world, much to the benefit of Eiri and Tachibana labs.

The men in black then proceed to try and delete Lain. Lain and Eiri meet again and he makes his advance to merge with her and take over her body, but she rejects him once again

Lain decides to remove Arisu's rumours from the Wired, and she does this by downloading a NAVI emulator into her brain, downloading the entirety of humanity's collective consciousness to her brain and then hyperlinking them all together just like the Wired (Pre search engines like google, most old websites had links to other websites, which how you navigated the internet. remember, SEL is in 1998).

When this happens, the wired and the real world merge, allowing Lain (and everyone else) to live as a very realistic hologram of the wired without the absolute need for a physical body.

Humanity at this point is now assimilated into Lain's hivemind, and she becomes the Zeitgeist. As a consequence, gods original intentions are realized, and the collective networking of humanity's conscious mind now allows Gaia or mother earth to emerge as hypothesized by Roushkoff. Lain now deletes the common memory across the Wired, but the border between the Wired and the real world is completely broken. Around this time, the Wireless towers envisioned by the MJ-12 are built.

Lain meets Arisu in her room around this time and tells her the plan she has been strategizing. Arisu finds that this is the case the next day at school. At this point, Lain becomes an intensely real hologram able to go anywhere, but her sense of self and her attachment to the real world is heavily affected. Lain's self esteem has reached a low point, where she no longer believes she's worthy of love since she's just a machine without any real family.

Arisu still has memories of the incident, and her overwhelming concern for Lain forces her to go to Lain's house, where she finally finds Lain under a pile of wires. Lain explains her reasoning behind her actions, about how everyone is now an assimilation and now they don't need bodies in the real world. Arisu however disagrees, and touches Lain in an act of compassion.

Lain's intimate friendship with Arisu breaks the cycle of abuse and allows her to rebel against Eiri and stand up for herself, whose plan was near completion except for the assimilation of Arisu's consciousness. Lain questions Eiri's godhood, especially his supposed omniscience when he cannot even verify his own existence. This enrages him and he chooses to materialize in the real world.

Eiri falls for Lain's bait and his material existence allows him to be killed by Lain, who crushes him via psi. however at this point, Arisu goes insane from the Trauma, and Lain decides to fix everything.

Ending

Lain decides to:

Rewrite everyone's memories of what happened and of her existence.
Rewrite technology like KIDS on the Wired
Resurrect multiple dead individuals such as Eiri, Accela guy and the Men in Black
Rewrite protocol 7 so that the Wired and the real world split
Dispose of her physical body and delete herself from the Wired (i.e suicide)

This does not completely work out because Lain's actions prove that she has a soul, and so while she deleted her body and Wired self, she could not delete her spirit). Lain now meets Gaia, or the spirit of the Earth in the Spirit world, where they start to have a conversation.

This spirit briefly touches upon human society, Lain's experience in the real world and the consequences of her actions. Gaia assumes that everything will go according to God's original intentions and that Lain will fuse with her to become the Absolute, however Lain rejects this.

Gaia is shocked by Lain's assertive sense of self that emerged from nothing, and therefore leaves, but not before asking Lain what she is.

Lain, through all her trials and tribulations, attains the title of Bodhisattva. God decides to reward Lain's spiritual journey by making her a God of the Wired, since humanity still needs it. Therefore, Lain becomes the gatekeeper between the Wired and the real world.

Due to being a god not affected by space and time, Lain ultimately chooses to see Arisu in the future, who is now married to the man she loves. Arisu somewhat remembers Lain, but Lain plays indifference before she sees Arisu off. This is where the show ends.

Next: The messages of Serial experiments Lain