The series of events that make up this masterful dystopian short story, which has profound lessons for all of us if we sit up and take notice, follow.
However, the best way to find out what happens in a short story is to - see if you can guess what I am going to say - read it! Therefore, I am going to talk about one part of the story - the falling action, which will hopefully provide you with a pillar or foundation which will allow you to understand the rest of the story. The link provided below will also help you out with a summary, but please do not rob yourself of the pleasure of enjoying this excellent short story - you would be doing yourself a disservice.
The falling action of a story is normally defined as what occurs after the climax or high point of the story, leading towards the ending and the resolution of what happens. Given this definition, the falling action of "By the Waters of Babylon" occurs after the epiphany or moment of insight that the narrator experiences after discovering the "dead god". Thus the falling action consists of his return back to his father and his tribal grouping before his conversation with his father and the resolution of the story:
I had no fear after that - I had no fear going home, though twice I fought off the dogs and I was hunted for two days by the Forest People.
Thus we are brought from the climax of the story through to the end of the story, where John the narrator shares his new-found knowledge with his father and they decide what they are going to do about it. Note their resolution to use this knowledge but to apply it with wisdom - this is surely a challenge to us to not repeat the mistakes of ourselves as depicted in this story.