Just thought things over and I think this is what actually happened. Everything that happened on the island was real, as Christian pointed out.
They were not dead from the plane crash. They all died at different times after wards (Kate, Sawyer, Miles, Frank, Richard). Hell they could have died on the Ajira plane for all we know.
The alternative reality (sideway flash) was purgatory. It was a place for them to gather before they could move on, hence why there were details that deviated from the original time line before they boarded Oceanic 815.
At some point, Hugo and Ben die on the island as well. That's why he said he was a good #2 and vice versa. I really doubt Hugo ever got immortality, since Jack never enchanted the water with magical words or whatever Jacob did.
That's my take on it.
Thats was my original thought and im leaning more and more towards it. Im still not sure though. The last scene after the final Lost of the crashed plane with nobody around just one set of footprints makes me wonder if they did all die in the flight.
and yeah i would have liked to know about the island really more about the statue I know Jacob said visitors built it and all but i want more.