Alvy watches rehearsals of the play he told Annie he was writing. The actor and actress look a whole heck of a lot like Alvy and Annie. The guy's even named Arty.
What's this? Their dialogue sounds a lot like the break up Alvy and Annie just had in Los Angeles, except this time, Alvy's the one doing the breaking. And Annie decides she's going to go with him back to New York. And she tells him she loves him.
As the actors smooch it up, Alvy breaks the fourth wall and tells the audience to go easy on him. This is what art is for, he explains: to get things that sucked in real life to come out perfectly.
Then he tells us that he did see Annie again. She'd moved back to New York and was living in Soho with some guy. We see Annie and her new man, and Alvy and a date, bump into each other in front of a movie theater.
He tells us he and Annie had lunch after that, just to reminisce, and we see them through the window of a restaurant, laughing it up, as Annie's version of "Seems Like Old Times" starts to play.
Montage time. As the song continues, we see a series of highlights—and lowlights—from Alvy and Annie's relationship: the first terrifying ride in her car, the lobsters, the walks on the beach, and so on.
Alvy and Annie part ways after lunch. They're on a street corner, but we watch them saying their goodbyes from afar, inside the restaurant. Alvy tells us it was good to see Annie again, and that he realized how much fun it was just knowing her.
Then he says it reminds him of a joke about a guy whose brother thinks he's a chicken. The guy won't commit his brother because he "needs the eggs."
Alvy explains that that's how he feels about relationships: They're crazy, but we keep putting ourselves through them because we need the eggs.
Then we see Annie go one way and Alvy go the other until the frame is empty, and Annie's song comes to an end.