The Doctor, Martha and Jack return to 21st century Earth, using Jack's previously broken time travel watch. The Master has been on Earth for 18 months, limited by the Doctor's last-ditch block of the TARDIS controls. As for the reason he'd been living as a human: he was resurrected by the Time Lords to fight in the Time War, saw what was required of him, and ran the fuck away to the end of the universe.