Ok so there are definitely spoilers ahead, if you didn't watch last night's Arrow, well sorry, but you will find out eventually right?
Felicity is not dead. There is no way they would write her off the show at this point. Also, they made it way too obvious. What in fact has happened, is that they are going to fake her death. In last night's episode Darhk made the comment that he was killing all of Ollie's people so he had nothing left to fight for.
Well Oliver is going to do everything in his power now to make sure that Damien believes Felicity kicked the bucket in that most recent ghost attack. He is even making this so believable that Barry doesn't even know the truth. Her "death" will last 2-3 episodes max, then she will come back, all will be happy, they will even tease a season finale wedding. Which will really be Laurel's dad and Felicity's mom, holy smoak!
What about the fact that Damien has a little group of people that seem like family? This storyline will drag on for a while, and that is for another store all together.
What do you think, are they going to fake Felicity's death?