It'll probably get explained by the programmers (the cached thing) after a while, but I guess initially the L2 characters will split up to explore what they believe is their home town (even though they know it was destroyed) and start seeing weird things (like themselves living out memories, people ignoring them, etc)
This could even be how Johnny finds out he has a physical presence (sort of) in layer 3, because he listens in on a conversation that is being repeated in front of him. Maybe Kevin or someone else tries to stop him from hearing, they get into a fight, etc.
At some point they'll get together and try to communicate with the programmers, who will explain what's going on.
I agree we need a separate battle thread. I'm in the middle of moving house though so I really don't have time (or internet) to contribute to that until next week really