Having won the karate tournament, Daniel celebrates his victory. His opponent is reamed out by his 'Sensei', who breaks his 2nd place trophy. Mr. Miyagi confronts John Kreese, - the raging karate master - and engages him in combat, knocking him out cold. News from Japan sends Mr. Miyagi reeling. His father is on his deathbed. Daniel accompanies Mr. Miyagi to Okinawa, thus conveniently writing his former girlfriend and mother out of the plot (Daniel mentions something about Ali falling for a football player). The rest of the story plays out in Okinawa, where Mr. Miyagi must confront his past, and Daniel finds a new love interest, of course.
In this movie, there is no tournament to be won (although there is a final battle when all is said and done). Although Daniel's training does continue in some small ways, it is not the main focus of the movie. Daniel's new adversary is the nephew of Miyagi's immortal rival, Sato. As it turns out, Miyagi left Japan because of a disagreement over a woman who was arranged to be married to Sato. Sato holds Miyagi as the object of his dishonor, thus making them enemies.
Daniel continually finds himself bullied by Sato's nephew and his goons. Daniel seems a little too powerless in his ability to fight back, despite having won the karate tournament just months earlier. The final showdown between Daniel and Sato's nephew is a very memorable scene. Although not as epic as the original Karate Kid, this scene still solidifies this movie as a worthwhile watch.
Mr. Miyagi never has a final confrontation with Sato, as they come to a mutual understanding. Sato realizes that he was being unreasonable with Miyagi, and thus turns his back on his old ways of exploiting the village.
Much like the original, this movie holds authenticity in high regard. Many of the actors who play Japanese characters are indeed Japanese, maintaining a sense of believability. And again, much like the original, the movie is not stifled by obvious plot holes and unrealism.
The pacing of the movie is maybe a little "slow" by today's standards, but is nevertheless entertaining.