This episode contains characters from Season 1 flashbacks, with Oliver confronting the villain and mentor from that storyline. In the Season 4 flashbacks, Constantine explained that Lian Yu is a nexus of mystic energy. Now, those energies are spiking, causing resurrections.
Lyla's new outfit at the end of the episode is based on her Harbinger costume in the comics.
In the comics, Roy's arm was amputated in an epic fight against Prometheus in Justice League: The Rise of Arsenal #1, which also led to him being put in a coma and his daughter Lian being killed. Roy recovered and developed an addiction to his pain medication, and was ultimately given a cybernetic arm by Cyborg.
"Purgatory" is the English translation (per the show) of Lian Yu, the Mandarin name of the island Oliver was marooned on.