I like it when Oliver goes off the rails... Poor Felicity
Theory time.... Diggle is in the grave. Oliver is not talking about killing Darhk, but killing Andy Diggle, because Andy killed Digg.
Or
Diggle is in the grave, but Merlyn killed him, and Oliver has finally come to his senses about killing Merlyn.
Yeah I don't know about of any these theories, but I still think it's the Mom of Oliver's baby.