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Ryan offers Elizabeth a "chance" to live or die with Atlas. Then we return to Rapture through the tear. This part is fairly clear and there's no need to go into detail. Then we go through Fink MFG a bit and we find out that Rapture and Columbia have been exchanging ideas, between Fink and Suchong. The only thing I don't understand about this part is who and why they actually wanted to turn Liz into a killer. Although Daisy never intended to hurt the child in the first place and never would have. Elizabeth is forced to stab Daisy, because of the child, and thus turns her into a "woman". Daisy sacrifices herself in order to achieve this goal. This comes in line with the events of Infinite. They discuss turning Elizabeth from a girl to a woman. Whilst in Columbia, we overhear a conversation between Daisy and the Luteces. Then we fight a few people, then we return to Columbia through the Lutece device. Its obvious that Atlas uses Elizabeth throughout the episode to reach his own desirable end. So she eventually decides to go back to reality, in exchange for her losing her powers. However, she is overrun by guilt of leaving Sally to rot in Rapture. Elizabeth then goes to what seems to be her projection of heaven, the amazing Paris section. After the Big Daddy kills Booker is Episode 1, it kills Elizabeth aswell.
