My guess is they'll either do a total reboot (with a re-cast) or, more likely, do a soft reboot where it could fit in continuity with what came before but nothing that came before would be required to understand the current situation. With the blip, there's a lot of flexibility there. As long as they make Luke Cage an established hero, everything necessary to get him from where he was at the end of the Netflix show to where they want him could have occurred in the five-year time gap.
So basically what the Arrowverse has done with John Constantine. There are enough subtle links to the NBC series to make it clearly the same continuity (e.g. Astra Logue is African-American rather than white and English, and the original actress made a voice cameo before the role was recast due to age differences), but there are no explicit mentions of anything from the show that wasn't originally from the comics.
Really, though, if there are no legal restrictions on using story elements, there's no reason not to. People often talk about what previous viewing is "required" to understand a new installment in a series, but ideally, it should never be required. Anything you need to know to understand one installment in a series should be explained right there in the story itself. After all, every story depends on prior information, whether the audience saw it or not. The plot of the very first
Star Trek pilot, "The Cage," was shaped by the aftermath of a prior, unseen battle on Rigel VII.
Hamlet is entirely about the aftermath of a murder that happened before the play started. The parts we haven't seen are explained for us right then and there, and that's all that should ever be required. Actually seeing the prior events is a nice bonus, but it shouldn't be an absolute requirement. You're not telling a story right if you create hurdles in your audience's path rather than ramps to ease their entry.
So if you're reintroducing story elements from a prior season, then you should do it the exact same way you'd introduce backstory for the first time. You explain it in the current story. You have a character who knows about it explain it to a new character who wasn't there for it, or you have two or more returning characters talk/argue about it in retrospect. Of course, it's best to do that in a way that isn't clumsily expository, that feels like organic dialogue rather than an infodump, but that's true for any backstory exposition.
