The One = The Good (Plato's Form of the Good)
There is a process of emanation, beginning at the top. There is also return. The One creates everything, and everything finds its true nature in a return to the one.
The three levels above the line are called hypostases. For Plotinus this seems to mean little more than "levels of reality". In later Christian thinkers, however, the word takes on a much more significant role. It arises in the discussion of the relationship between the parts of the Trinity. Early on, it was one ousia (substance), three hypostases (manifestations). But in some places (like Plotinus, for instance), hypostases seems to mean something very close to ousia. Augustine, in De Trinitate, gets involved in this discussion by bringing in the concept of persons.
Plotinus doesn't want to say there are three "ousia", because he doesn't want to say that the One exists at all. It is the source of existence, but itself does not have existence. The One is a development of the Parmenidean/Platonic tradition; Plato would have called it the Form of the Good, but would have been ambivalent about whether it was reached by intellectual effort. Certainly the rest of the forms are, but there is a sense that the form of the Good is reached only though mystical vision. For Parmenides, that which is at the top of the hierarchy is in some sense unifying.
Another way of thinking about the One is as pure transcendental subject. It cannot be objectified. Instead of "One", it could be called "All". It does not exist either by necessity or by chance. It simply wills itself to be. What all this means is that we cannot understand the One (it is not an intelligence), nor does it exist (because existence requires separation, which the One cannot have).
The Intelligence (Nous), on the other hand, can be seen as a combination of Plato and Aristotle. The intellect is the combination of one many. It bears resemblance both to Plato's notion of transcendental forms, but also to Aristotle's notion of concrete forms. Nous has a divine element to it, which points to the One.
Intelligence contemplates the one, and as such is the repository of the Ideas (like Platonic Forms) that form the basis of all creation. This is the location of all potential beings in what Augustine later calls the "rationes seminales". Each bit of creation is already contained in God
The Soul, finally, is a combination of Plato with Stoic elements. There is both one and many here one world soul, yet many souls in nature. The soul is the Intelligence projected into space and time. Plotinus speaks of a higher, or rational soul, and a lower, or irrational soul. .
The standard version is of a linear hierarchy. It could also be that Plotinus is doing proto psychology. The most common metaphor for Plotinus is one that involves concentric circles, for instance, with the One at the centre. That implies that it is in immanence, not transcendence, that mystical experience is found. Perhaps all these levels are within us. That would certainly fit with the Platonic side of his thought, in which we already have what we need inside us. The process of emanation and return could be read as the analysis of consciousness; the One is within everything, as its source. However, Plotinus also says that the One is "absent from nothing and from everything". It is present only to those who are prepared for it. (This, by the way, rules Plotinus out of the pantheist category).
There is a third possibility. It could be that both these are correct, and there is a dialectic involved here. It could be that the transcendence of the hierarchy and the immanence of the psychology are in dialectical tension, and he wants to emphasize both of them.
Whichever version we take, we need to consider this process. Plotinus, like Plato in the Symposium, talks a great deal about love (eros). Love is our natural response to that which we believe is good, whether it is or not. The best love is to that which is really good, and furthermore, to that which is the epitome of good, the One. Everything is marked by this kind of love; there is a natural striving for the source.
In the case of the soul, as it is drawn upward toward its source, it becomes Love itself. When the soul has achieved union with Nous, it will be able to exercise the powers of Nous: grasping its own content, and moving toward the One.
This process is known as contemplation. The soul has forgotten its origins. It has become trapped in dualistic thinking, preoccupied with itself but not its true self, but rather what it can grasp for itself. This kind of self consciousness can be an impediment to the soul's knowledge of itself. The soul is ec-centric -- not centred.
This self consciousness will evaporate as the soul returns into itself. The purpose of this return is to achieve simplicity, and the means to this is purification, or katharsis. This includes the pursuit of moral virtues -- as for Plato, the intellectual is also the moral. However, the pursuit of the moral can also hinder the soul's ascent. Morality is concerned with the soul's action in the sensible realm, and this can bind the soul even more firmly to that realm. The proper purpose of purification is tranquility (the Stoic influence is seen here).
The purification must also be at the intellectual level. This includes dialectic and other mental training (Plato comes in again). The most important part of this training comes in the realization that everything good is borrowed. There is beauty in nature, but it is borrowed from something higher. Even at the realm of the Intellectual (Nous), we must look beyond. This ability is learned at lower levels so it can be practiced at higher.
The result of this purification is that the soul is restored to itself. It comes to the realm of Nous, and passes beyond discursive knowledge (based on distinctions between subject and object) to reach more intuitive knowledge. But there is still duality here. There is still a distinction between the knower and known.
So, there is one more step -- to the One. Suddenly, the soul is swept out of itself into union. Porphyry reports that this happened only 4 times to Plotinus. The soul does not achieve this; it is granted. It is not that the One knows anything below it (Aristotle's separated substances come in here); the soul simply passes out of itself into the One. The Nous does not become One; the One does not become Nous. We pass beyond self consciousness, for that is evidence of duality in the soul. This final move is terrifying for the soul, because it is a leap into the unknown. However, at this point the soul becomes terrifying to itself, because it does not recognize itself anymore. It longs for the state of un union, but as it passes outside of itself, it finds its true self, and it is at one with all of reality. It is the "flight of the alone to the Alone", to use a familiar phrase from Plotinus.
At this point, the One still has no real concern for the soul, and the soul has no concern for other souls on the path. Even in union, there is aloneness. This will be a problem for Christian interpreters of Plotinus.