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Diablo 3 takes place in the realm of Sanctuary, 20 years after the Archangel Tyrael destroyed the Woodenstone with his magic sword. The explosion blew up Mount Arreat and reduced Tyrael to component parts. After Dorothy spent 20 years putting him back together, he returned to Heaven to face judgement for being a retard and almost blowing the Earth up. After some riveting dialogue and a totally kickass fight scene, the Archangel Imperius punished him for his transgressions by turning him into a nigger and launching him at a village full of white people. Unfortunately, he missed, and ending up launching Tyrael into the old cathedral where Diablo was buried. For some unexplained reason, this resurrected every dead demon on Earth, and they all began tearing up the countryside. The angels simply shrugged their shoulders and watched the carnage while drinking malt liquor and pissing on hapless peasants below.
You start the game as a lone warrior, sent to Tristram to investigate the Flaming Nigger from Outer Space. You encounter a girl named Leah, the niece of Deckard Cain from the first two games. Later, the two of you end up rescuing Cain himself from the newly resurrected Skeleton King. Cain doesn't identify your items this time around, so his only purpose in the game is to say stupid bullshit before being murdered by a purple fairy with Princess Leia hair.
After meeting up with Tyrael, you both embark on a quest to defeat the remaining two lesser evils, Belial and Azmodan. You would have known about them if you read the Diablo II instruction book all those years ago, but you didn't, did you? Your first target is Belial, who is known for being a master manipulator. Or at least, he was, up until several angels dropped a safe on his head, reducing his intellectual capacity to that of a 10 year old. In the process of hunting Belial, you discover that there is a Magic Soulstone MacGuffin of Doom that somehow trapped all the souls of all the evils from the first two games. That's right, nothing you did in either of the first two Diablos actually mattered! What a wonderful plot twist!
Anyhow, you resolve to trap the two souls in the Soulstone MacGuffin so your totally-not-evil witch partner Adria can perform a dark necromantic blood ritual to "destroy" it. After capturing the two souls, you leave the concentrated power of Hell in the hands of some woman you've only known for about 30 minutes while you go have a beer. Of course, while you're away having the beer, Adria resurrects Diablo, who returns as all 7 of the Prime and Lesser Evils combined. After a hefty amount of thought and consideration, Blizzard decided to make the resulting abomination look and sound like a gay, effeminate version of Diablo. He even has tits. Really, we're not joking. They jiggle around, too...
Gay Diablo invades Heaven, and you follow him in. A dramatic confrontation ensues at "The Pinnacle of Heaven", and Gay Diablo turns into a Pinata that explodes in a shower of cash and prizes. There is a great celebration, right before you go out and do this all over again 3 more times.