We learn that Zoot is actually a CIA operative hired to pose as a 'lost' saxophonist, all the while eliminating unwanted enemies who are pretending to be Muppets. This explains the disappearances of George the Janitor, Hilda, and much of the cast of both JHH and MT. Walter was nearly destroyed by Droop when he snuck back into the group, only to be rescued by Zoot at the last minute. He has since been placed in the Witness Protection Program, hence his absence from the new show.
In a B-Plot, we learn that Camilla's absence had to do with her leading her fellow chickens in the War on Colonel Sanders, who (as we all know) recently returned to pop culture. The Colonel makes a guest appearance, and unsuccessfully tries to talk Kermit into letting KFC sponsor "Up Late."
Yes, I know I have a sick mind...
Okay, how about this - Janice rewarded Sam for 'befriending' socially awkward Chip by giving him a kiss on the cheek/beak, right? Sam sees Chip as a way of getting positive attention from Janice, and more or less forces to two of them to become friends. Chip is initially thrilled at the idea of someone liking him, but he eventually grows tired of spending too much time with Sam. Chip learns to stand up for himself, telling Sam that he needs space. ("Usually, I'm the one people tell that to!"). Sam learns to be a better friend.
B-Story - Crazy Harry goes to an insane asylum.