The ending of Beneath a Steel Sky has it turn out that as Foster discovers the city and its mysteries within, he plays right into LINC's hands and discovers his father, which created LINC and literally had fused with him. The backstory was that Foster's mother escaped with Robert (real last name being Overmann) years ago in an attempt to get away, but by now his father was old and weak, and LINC needed a new blood relative. The helicopter crash in the beginning of the game which lands Robert in the mess wasn't an accident...it was his father trying to spare Robert's fate from LINC. Everything else was an elaborate gambit to use Robert's natural curiosity to find out what's going on and playing right into LINC's hands. Ultimately, he uses Ken (Joey's board downloaded into an android, of which LINC was trying to replace all humans with) to replace Foster's father.
It's been ten years (though everything from Foster's appearance to the citizens' remembrances of LINC suggest more than ten years, but whatever) since Beneath a Steel Sky since Robert Foster left "Ken" to rule over Union City in LINC/Overmann's place (Hobbins was also there in the end of Beneath a Steel Sky to serve as an advisor, but he got retconned out). One day, while fishing with one of the Gapland's villagers, Max, and Max's son, Milo, he witnesses a giant metal machine emerge from the water and kidnap Milo, leaving Max comatose. He manages to follow the machine back to Union City, where his adventure started all those years ago.
He tracks the machines to a dead man in the desert, where a strange girl, Ember, is collecting his digital ID. Foster startles her, and a bird (a "Gang-Gang") takes off with her device.
With only an android's severed finger to guide him, he enters the outskirts of Union City. Through a series of trades and puzzle solving that involves expired sausages, battery theft, and some work with his trusty crowbar, Foster manages to get the dead man's ID (a "Graham Grundy") on his newly-implanted "U-Chip" from Ember, a hacked scanner that lets him manipulate devices around Union City, and entrance into the city with a truck driver, Wendel. He does trade the android finger to Ember as part of this process, but he keeps his crowbar, which is similar to what he had last game.
Union City is a bright metropolis where citizens worship "Savior Joey" (aka "Ken" aka Android-Joey) and have erected statues in his honor, while the city is now ruled by the Council. The Minister of Plenty ensures everyone has enough to eat, the Minister of Aspiration wants people to strive for more "QDOS", the citizen's "happiness points" that's basically social currency, the Minister of Wellbeing (basically what it sounds like), Minister of Safety, and the Minister of Comfort. Most everyone is employed under these five, and they're all color-coded. Friendly robots are also a fixture of the city, acting as butlers, cleaning, and bartenders. A new system, MINOS, replaced the LINC system.
Foster senses something is up when the Graham Grundy ID is corrupted somehow, and believes him to be involved in the kidnappings. When he goes up to Graham's apartment, he meets a strange rat-faced girl who's involved in petty vandalism, but bigger issues are at hand. Songbird, Graham's wife, is being interrogated by Alonso, from the Ministry of Wellbeing, to investigate why the missing Graham has suddenly turned up safe and sound. Doing some snooping to pass the interview, he discovers that Graham was a train cleaner, and into some conspiracy theories and a suspicious new friend, Leet. He had also asked his robot butler Chipworth to not say anything about him. His wife hated him, including the fact that he stole one of her stuffed animals. Foster also discovers a hidden box outside a window that contains a photo of a missing child.
The stuffed animal has a tracker, which Foster is able to track to an obsolete area code. Before he can continue on his quest, he finds the rat-faced girl engaging in vandalism. When another Wellbeing employee, Orana, says her name, Raquel, she apparently forgot where she was or what she was doing, requiring a puzzle to save her. Orana then takes her to the Reflections Spa to recover.
The only place to have such a map is the Old History exhibit at the Museum of New History, a plaza with a hologram of Miss Danielle Piermont who the game has to remind us of who she is (and hopefully not her lounging around in extra-large lingerie). Besides her and a security guard I forgot the name, they're the only returning side characters.
The Museum of New History explains some of the lore, including how Android-Joey saved the day (making no mention of Foster) and some of the other things going on, like Union City's partnership with the nearby Asio City. By acquiring an Aspiration Brooch (with another puzzle) Foster is able to gain entry into the Old History Exhibit. There are some mementos of Beneath a Steel Sky with the tentacles of LINC, which are dismissed as rumors and nonsense. There's also a closed exhibit that featured the original Joey board, disabled due to the harshness of the robot's tone. After causing a commotion, Foster is able to liberate the original Joey with a vacuum cleaner body like in the old game. Joey helps him find the location of the signal and they escape the museum. However, they need a travel pass to gain access to the recycling plant where the signal is, as the system deems it too dangerous.
Orana is overseeing the Aspiration Gala event to happen that evening, and Foster ends up causing a scene that gets him a travel pass but ruins the vacuum shell, so it's back to circuit board-only Joey. The recycling plant sequence involves some puzzles similar to the first game, but to make a long story short, Foster meets Leet, who is about to attack him but takes note of Foster's rare Schriebmann Port, which allows him to go back into the LINCspace and use a backdoor to the MINOS system in order to undo the software installed on his and Grundy's IDs.
There's some more story here as Leet presents a new Joey shell (a floating orb, basically) and what the Council of the five ministers is up to (Asio City, for instance, is being exploited to fuel resources for Union City) with Foster leaving with the question if Grundy was really good after all. Leet mentions he has a plan to get out of the city but doesn't explain it. Returning to Grundy's apartment (where Foster could choose to return the stuffed animal if he didn't burn it at Leet's place), Foster learns that he needs to go to the Aspiration Gala that night. He sees Raquel there, but she has no memory or recollection of Foster. After creating a diversion, Foster manages to sneak upstairs where he saw two suspicious characters. It turns out that Orana and Miss Piermont are the two, actually resistance fighters to the Ministry. Foster is attacked by androids, where he sees Android-Joey telling him to relax and talk later.
The "Reflections Spa" is where all the kidnapped children and Foster are, replacing bad ones with better ones. Unfortunately, while Orana, Ember, Joey, and Danielle are able to rescue Foster and the children, they can't get them out of the city without triggering alarms. Leet has been killed by the androids though Foster manages to recover a last message and figure out what Leet was trying to do, sneak into MINOS and screw around with everything so everyone now has infinite QDOS, and now the children can leave without causing any problems (besides society breaking down, of course).
With the children gathered at Wendel's truck, Foster has one more task—as the city is now in lockdown, Foster makes his way up to the gates, and after defeating Alonso and saying goodbye to Songbird (who will treat Foster differently depending on a few choices in the game), everyone can leave...except there are some gun turrets, which Joey sacrifices himself to protect the truck. Afterwards, Foster and Orana head up to the Council for one final showdown.
Turns out the Council is all androids and facets of Android-Joey's system, having created them to rule instead of him as human councils would be seen as more acceptable. Foster logic-bombs all of them, pointing out flaws (Safety just makes people fearful, Comfort makes people lethargic, etc.) and as he dies Android-Joey admits that it he was just trying to do what Foster asked, make people happy, so the whole thing was his fault.
With society in shambles and the achievement "Snuffing Out the Light" acquired, Foster and Orana leave, with Foster keeping the ruined Joey board as a memento.
See also some more plot analysis, or return to the main game page.