Using a chapter screen for actually telling part of the story is a trick I've never seen used anywhere else (not counting ending screens). Michael tells us that he's set his own plan in motion, and betrayed Joshua before you got a chance to. He wants to wipe the universe clean, destroying everything in it, to attain his own idea of perfection from absence and emptiness. Ernie raised the point that the player's motivations aren't entirely clear at this point. The optimistic interpretation would be that the player realizes that Michael is the true enemy of all that exists and is trying to resolve the crisis; the pessimistic interpretation would be that Ian is correct that you're just a killer and Michael is the biggest target you have access to and the one attacking you right now. Either way, it's kill or be killed.
This level is a set of battles much like YTYBT: Michael teleports out, and a series of doors release armies of Metalloids. They move much faster than the normal Metalloids, but if you can guess which door they're about to come out of you can just stand in front of it and destroy them with your psionic weapons. There are a few 1x health canisters scattered about the arena, although it's better to charge up a good bit with the Reaver Fusion Mace before leaving Chaos Inc (Michael is very patient :P ) While you fight, several clones of Michael (or maybe Michael's awareness from different times?) watch from the balcony. Eventually, the door to the north opens and reveals a teleporter which puts you in the top level of the arena (and also teleports in a large number of enemies when you approach it). When you go up there, all the clones of Michael will disappear. Perhaps he has realized that you really do have the power to destroy him now, thanks to Joshua's enhancements. In the south of the balcony is a door, behind it is a sort of platform overlooking space. If you step into the red square at the end, you will teleport to the next level. However, if you wait a few second, a rare flash of light will give you a glimpse of a bizarre structure in the distance; a flying pyramid with some sort of tendrils emerging from the bottom. You can get a better look at it in the Shapes file- the tendrils are a pile of metal girders. This is the chariot, raised from the planet by Joshua (do these things need unique keys to start them like Earth cars? :P ), assimilated by Michael, and free to roam the universe. This is where your path ends, and it's where you're trying to go over the next few levels.