It turns out that the knight who orchestrated this ambush is Hook, with help from Smee and two of his crew members, and all the flaming arrows were held by dummies.
As they arrive to a tavern to celebrate their latest steal, Hook's men get him a bar girl, but outside he, not interested, gives her money and leaves.
Ariel tries to talk Hook into saving Eric and giving up the Jolly Roger, but he tells her love brings pain and that he's doing her a favour.
At the same time, Mary Margaret and David walk on the beach and notice a group gathered around a woman who just washed up on shore, which they discover is Ariel.
At the docks, the two follow Eric's cloak as it floats through the air to the water, only to disappear under the surface, which disappoints Ariel, who starts to cry as she mourns her loss, and Hook tells her he's sorry.
But as Hook runs up to Ariel he reveals to her they met in the missing year and explains what happened to Eric, saying that he was too ashamed to tell her before, he apologizes.
Unfortunately, after admitting to his confession by swearing on Emma Swan's name, Ariel blows green powder onto Hook's lips and then transforms into Zelena, who had used her disguise as Ariel, because she knew that Hook's guilt from the day he chose the Jolly Roger over Eric would continue to haunt him.
Later that evening, Hook visits the loft, where he lies and tells Emma and Regina that Ariel had left to find Eric.
Using a "magic mirror" spell, Emma watches the real Ariel and Eric embracing on a beach, happy and safe.
Hillary Busis of Entertainment Weekly gave it a great review: ""The Jolly Roger" was an appropriately exciting hour of television—complete with the sort of confounding, frustrating final twist that Once should consider having trademarked.
Turning the classic permed villain into a swaggery anti-hero, now a tortured romantic, is one of the most successful character transformations this show has taken on.