Stefan is traveling around with Klaus, killing people. Klaus wants to build an army of werewolf/vampire hybrids and tracks down his first guinea pig, Ray Sutton.
Damon tells Elena to let go of the murderous Stefan, who calls her at the end of the episode and says nothing, but lets us know part of him is still good inside.
There is still sexual tension between Damon and Elena, but shows little sign of being acted upon.
Jeremy is being haunted by his dead exes. Matt is his BFF now and will soon be his partner in crime.
Caroline and Tyler have smoldering hot sex. Then his mom shoots her with some sort of tranquilizer.
Alaric is a bit of a lost soul at the moment.
Source: TV Fanatic