There are quite a few ways to look at things that happened in order to resolve them in some way, but I think the strength of the show rested on not having too much spelled out for the viewers - you have to go in and use your imagination to fill in gaps, and in coming episodes you were either right or wrong - or completely off point, which lead you as a viewer to open your mind a bit more. The finale was no different.
I think everyone died on Oceanic 815 when it got near the island and broke apart in mid-air, but the island was a completely random thing. Everything that happened there was only metaphoric, it was sort of an Elysian Fields kind of place until the souls there could work out accepting their own mortality. Consider the island in a sense as purgatory/limbo. This idea comes from the notion that in a state of purgatory/limbo, you're in between the living world and the afterlife. You remain there until you accept that you've died in the physical real time of life, and then you're able to 'move on' - as was stated in the finale. Some folks hated being in limbo, and thus hated being on the island. Some folks loved it, because existing in between fit them well. None of the characters who were principal players seemed at peace within themselves until they began interacting with one another in the sideways flashes, and in love found the peace that had so eluded them. Finding love again and the acceptance of their fates, as it were, brought them acceptance and peace with all that had happened. It didn't matter if they had been confused, they were given peace through love and contact with one another and that set everything right. Coming together in the church confirmed for them that each had died in the crash, but were being reunited in love and peace, and that fulfilled them enough to move on from limbo. I also thought it was especially nice to include the shot of the stained glass, which had imagery symbolic of all the major religious doctrines, leaving it open and available to all.
All of the flashbacks were their former lives, the stories of who they were in life; all of the flash forwards and flash sideways sequences were designed to show you how the characters worked out for themselves an acceptance of death, perhaps communally as they all died communally in the initial plane crash. The point of the flash sideways sequences was to offer a middle ground - backward and foreward are two different extremes of the same thing, but limbo is what you have in the middle. There's no real timeline here because time doesn't exist in limbo.
I quite liked how they tied certain beginnings to the ultimate ending. For instance, let's consider Jack for a moment. When Jack came to at the very beginning of the show, he was in the bamboo forest. The first thing he saw upon waking was Vincent, the dog. Dog is god spelled backwards, which is why I think the dog was a metaphor for god - that and the fact that if you believe as I do, that Jack died in the crash along with everyone else, then god came to him at his death. He wasn't ready for that because being a doctor and a leader he needed to take care of people first. By the end, he let go and began the process of moving on after he had done literally all he could do for the benefit of everyone on the island, and the dog came back to his side to be present in that moment when he got his sign that he could let go and move on. That was when the plane carrying the remaining 'survivors' flew overhead, reassuring him it was finally time to move on. He was the leader, at least in thought, more consistently than anyone else in the show - so he couldn't let go until everyone else had been accounted for first. He struggled for peace throughout the show, and finally found it in seeing the plane in flight overhead, signifying the opposite of the downed plane and instead the imagery of 'moving on', literally. Then the close up of Jack's eye - it ended as it began after coming full circle.
What's with the Dharma Initiative, or The Others, or the foot that remained from the original statue, or the polar bear(s), among other things? Those things are mysteries - you should leave the mystery to be what it is. That's what makes it all so interesting, you're not SUPPOSED to have it all spelled out for you! Perhaps those things were meant to distract you from figuring out too much too soon - who knows. The physical aspects of the island were less interesting to me than the human story happening.
The idea that all died in the crash is reinforced by the final images you see before the credits roll of of the plane wreckage on the beach, with no signs of life anywhere. Of course people are going to wonder what happened to Michael and Walt, what happened to Mr. Eko, why were they not part of the finale - and for that matter, why didn't Bernard & Rose come back to the church as well if they too died in the crash? That's a simple answer - they were never in limbo, they accepted their death as it happened and moved on immediately, completely bypassing limbo. What about Ben, why didn't he go in the church at the end with everyone else? Perhaps he was an angel or some sort of escort through the existence in limbo - he wasn't in the crash, so he might have been dead already from an unrelated reason that kept him tied to the island. Perhaps he was in his OWN perpetual state of limbo. You could make the argument that LOST itself is a metaphor for not accepting your fate, the place you dwell in limbo until you do accept it. Ben's transformation from bad guy to good guy began with his responsibility in his daughter's death, and in time he developed genuine love for each of the 'survivors' - perhaps he couldn't accept that it was all coming to an end and that they were moving on because he knew he couldn't go with them because he wasn't ready - or because limbo was to be his punishment. He constantly put himself in harm's way and took a lot of physical abuse, which might well be a metaphor for his internalized self hatred; he took those beatings because he knew deep down he deserved them for letting his daughter die.
I don't believe in an afterlife, but I thought this envisioning of such a thing was really beautiful.