Warning! The following contains spoilers for the Arrow episode "The Demon." Read at your own risk!
Oliver's prison stint got even more interesting in "The Demon," as the incarcerated Green Arrow finally came face to face with the prison's mysterious character known as The Demon. As it turns out, the character was actually someone from Oliver's past, and a character Arrow viewers haven't seen since Season 5. The series finally brought back the long-lost character, Talia Al Ghul, as she re-emerged to ask Oliver for his help.
Talia made her presence known not long after Oliver made his way into Level 2, and the hero was understandably shaken by her appearance. After all, his mentor turned enemy was one of the folks unaccounted for following Lian Yu's destruction, so it wasn't known whether or not she'd re-emerge. Talia revealed she'd used Diaz's drug to restore herself afterward, which appears to have been effective minus the scarring on her face.
Unfortunately, Talia didn't have any details on Diaz. It was all a ruse to get Oliver to Level 2, so that she could ask him a favor. It turns out Oliver wasn't the only high profile criminal hanging out at Slabside, as the Daughter of Ra's al Ghul was stuck in Level 2 as a prisoner. As Oliver soon learned, the area was a far tougher section of the prison compared to where he'd been prior.
Talia needed help escaping Level 2, which she revealed that Dr. Parker used to conduct twisted psychological experiments on inmates. Oliver eventually agreed, but requested something of his own in exchange. Oliver didn't wish to put his family at risk by escaping and instead instructed Talia to pass on a flash drive to Felicity that would reveal what was happening at Level 2. Talia escaped, and her flash drive helped Felicity, Dinah and Black Siren bring the experiments to an end.
Talia's work wasn't quite done after that, as she still had a score to settle before disappearing back into the shadows. Talia ended up confronting Dr. Jay Parker and murdered the physician for his role in her torture and that of the rest of the inmates. If Felicity and the gang's exposure of Level 2 wasn't going to completely end the experiments, Talia Al-Ghul's murder of the psychiatrist almost certainly did.
We're not sure what's next for Talia Al Ghul now that she's back out in the world, but we can guess that the story between she and Oliver isn't quite over. This collaboration showed the two are capable of working together, but would the same be true out in the real world? It'll probably depend on the circumstance, but after the break out, it appeared Talia had gained some additional respect for her former pupil and who he had become.
Arrow also brought another character back towards the end of the Season 7 episode, as Anatoly Knyazev was seen in Ricardo Diaz's clutches at the episode's end. It was a position Anatoly did not appear to be enjoying, as Diaz had him hoisted into the air and scared. Anatoly may be back, but judging from the amount of bodies strewn around him, his return may be short-lived.