The episode beings in the midst of the battle from Battle of the Swords 1. Dark Ness reads off loudly to the battling Nobody how the two legendary opposites can be combined into the Reincarnation. The Lights also hear of this, and the battle's goal switches. However, Dark Ness warns that the person who combines the swords must be perfectly balanced in light and dark. The Darks choose Dark Pit, because he is an angel, but he is also dark.
Dark Ness suggests they use an extremely dark and extremely light soul, because Dark Pit was not PERFECTLY equal, so the swords probably wouldn't accept him. Nobody prepares to lose his soul, and they attempt to get Palutena from the lights to use. Soon, the Darks gain both the Merry Life and Merry Death, Nobody's soul, and Palutena. However, Dark Pit is unable to get Palutena's "bright soul." Dark Link comes over and helps him. Just as they get the soul, Light Link hits Dark Link with a Light Arrow. Dark Link backs out as he slowly disintegrates.
Immediately, Dark Pit grabs the souls and crosses the two swords over his head. In a flash of bright and black light, the swords fuse together. Dark Pit then holds the Reincarnation in his hands. The Reincarnation basically gives him the power to do anything. However, he falters from the Darks and instead declares himself neutral, and goes back to his home in the Skyworld. Now defenseless, both sides retreat to their homes as well.
After this, a scene is shown from Hyrule Field, where a large crowd has gathered. They see a flash of odd light, presumably the two swords combining as shown earlier. Embless explains to everyone exactly what that was and that the Reincarnation makes you able to do literally anything. Everyone waits in fear for something to happen, and here the curtains close.
"Everyone learns that by combining the two swords, an even bigger reward is created."