It turns out that Arkham Knight is Jason Todd (I think) and that he is going all Red Hood on the bad guys, but ultimately joins forces with Batman and his two Robins again.
Batman is unmasked and "executed" by the Scarecrow on live television in front of all of Gotham, but his deepest fear is finding out how interconnected he is with the Joker who, yes, comes back for a Mark Hamill cameo as a voice inside Batman's subconscious. Batman eventually overcomes Scarecrow's fear toxin and gives him a taste of his own medicine (not very inspired or original, really).
He then as Bruce Wayne Batman continues his quest to clean up the city with everyone knowing his secret identity. He is to be arrested at the end of the night once law is restored. But once players get 100%, you see Batman return to Wayne Manor where all of Gotham watches him from outside via news vans. He initiates a "Martha" code with Alfred, which seems to blow up Wayne Manor and supposedly killing both Bruce and Alfred in it.
A year later, everyone has moved on but a mysterious Batman using Scarecrow's fear toxins stops a mugger from killing a young boy and his parents. It is left intentionally ambiguous as to whether it is Bruce Wayne returned, or any of the three Robins who are all alive in the game (apparently Tim Drake, not Dick Grayson, is even marrying Barbara Gordon in this continuity!). So, Bruce probably survived, but gamers can pick which Batman is continuing the story on after that.