Can't really say that much happens in this episode, besides the pieces getting set up for the big finale.
The most noteworthy event is the kidnapping of Senator Kelly, as Magneto has insisted to continue with the war. Considering what they learned from Professor X's future, I found this move unmotivated and foolish from the great mutant. But he's got Mystique posing as the politician, and they are forcing the Sentinel program forward.
Wolverine somehow becomes the only person in the mansion who knows that Emma is a traitor, but Scott still foolishly trusts her, and because of his blindness for Jean, lets Frost go. I really didn't like the way any of this was handled, but we did get an interesting scene with Frost explaining to jean the nature of The Phoenix, and the Inner Circle's introduction.