This synopsis will contain spoilers!
Avice Benner Cho lives in Embassytown, a small colony settlement established in the center of the City. The Hosts, the indigenous alien species that built the City, speak their Language in two voices, and can only understand the speech of Ambassadors, cloned humans trained to speak with one mind and two voices. Without sentient thought behind the words, the Hosts understand no spoken words, no matter how perfectly they are spoken.
Growing up in Embassytown, Avice and her friends both respected and feared the Hosts. They waited for the times when ships (the Relief) would arrive with supplies and goods to trade, as well as letters for the children. They would run as far as they could into the City to see who could make it the furthest in the poisonous host air. Avice was the third best.
One day, when her friend went too far and became sick in the City air, Avice met Bren, a former Ambassador whose doppel had died years before. Though he could no longer speak to the Hosts, they remembered him. Sometime later, Avice was asked to be a simile – she would act out an event so that the Hosts could speak that thing into Language. Without real events, they could not speak a thing in their Language. Lying was impossible for them. Avice became the "girl who was hurt in darkness and ate what was given her" (259).
Avice trained and was selected to become and Immerser – a person who could pilot ships into the Always space beyond normal space that allowed ships to travel quickly through the galaxy. It was a dangerous job, and particularly in Embassytown. The immer space around the planet Arieka was dangerous, which prevented more recent Relief ships.
After years(kilohours) working as an Immerser, Avice met and married Scile, a philologist who was in love with her as much as the knowledge that she was from Arieka and even more so because she was a part of Language. She agreed to bring him back to Embassytown, though she never thought she would return. Now she did, as a floaker (an Immerser term for a person who goes with the flow toughly).
Her status as an immerse come back gave her some importance, and she became a part of the political society, with the Ambassadors and Staff (of Bremen, the colonizing force that technically controlled Embassytown). Scile did as well, though over time their relationship became weaker, until they stopped seeing each other entirely.
The Hosts periodically held an event named the Festival of Lies, in which the Ambassadors would lie (something the Hosts can't do) and then the Hosts would try to lie themselves. One Host, Surl/Tesch-echer is the best liar, and can tell actual lies (as opposed to the mere tricks of others). He begins to gain a following, and with others they visit the Similes like Avice in order to become better liars. A movement to oppose the lying begins among the Terre (and secretly supported by the Ambassadors and Scile). They are able to kill Surl/Tesch-echer.
A new Ambassador arrived, EzRa, but they were not doppels bred and raised on Arieka. Instead, they were completely different people who Bremen discovered had the ability to speak Language in a way they believed the Hosts would understand. However, when they do speak, it ends up having an addictive effect on the Hosts. The Hosts begin to demand more and more of EzRa's words, and will not function without them. They refer to EzRa as the god-drug. Things begin to get bad on Arieka as the entire planet, and all the biorigged machinery becomes more and more dependent upon EzRa speaking.
Ez murders Ra, and the Hosts quickly begin to go into withdraw. They begin invading more and more of Embassytown out of desperation, and the Terre inhabitants are forced to kill those who will not turn away. A group of Hosts (The Languageless and later the Absurd) rip out their fan wings, causing them to become deaf, but also freed from the addiction. They begin to murder both addicted Hosts and humans.
A former Bremen agent (Wyatt) reveals that Ez is an empathetic anomaly, and that with the equipment embedded in Ra's head anyone can become his counterpart. Cal, the remaining half of Ambassador CalVin (who Avice briefly had an affair with earlier) agrees to join him. They become EzCal, and while their words are still addictive, they also have the side effect of being irresistible to the Hosts. Anything EzCal tells them to do, they must do.
It becomes clear that the Absurd hope to wipe out all addicted Hosts and Terre so that the new generation of Hosts can grow up free of the addiction. They gather an army to bring to Embassytown. Avice works with Bren and YlSib (former Ambassadors gone rogue and living in the City) and a group of Hosts who were trying to break free of the addiction. After watching the Absurd communicate without Language, Avice realizes that if Spanish Dancer and his companions can learn to communicate the same way Terre do, they will be free of EzCal's addiction. After many days of working with them, they have a breakthrough and suddenly can speak without Language. They can lie, they can imagine, they can even understand and speak Anglo-Ubiq (English).
Avice, Bren, YlSib, Spanish Dancer and the other newly freed Hosts find the Absurd army and are able to show them that Hosts can be free from the addiction without maiming themselves. Together they are able to take control of Embassytown back from EzCal and begin the work to free all the other Hosts from their addiction. When Scile (who left Embassytown long ago) realizes that true Language is being threatened returns to stop them, killing Cal. It is useless however, as they now know how to make others compatible with Ez, allowing the proliferation of the drug to continue long enough to free the other Hosts.
Some Hosts choose not to be freed, and not to give up on Language. They live the City to start their own settlements where they can be free from the drug, but also free to continue in their traditions with the next generations. Avice sets her sights on the Immer again, with the intention of passing beyond Arieka, and thus beyond known Immer space.