I think they wanted us to decide for ourselves what alot of things meant (Better than having to give us answers that some of us won't like, I guess). My feeling was that the ATL was a type of purgatory, not good or bad, not Heaven or Hell, just a stopping point on the way to moving on. In their 'imagined' lives while they waited, there was an island, a Dharma (Ben and his father were there and we saw the remains underwater), but at some point the light went out and the island sank. It doesn't change things for the characters because this life isn't real. There is no light in their lives here. They will find the light and the love they seek when they are ready to come together and let go. The island has no power over them anymore. That's my interpretation.
The genius of the finale is that I can be right and someone who has a completely different take on it can also be right in their minds. They left it open for interpretation without just fading to black like the Sopranos. They showed us everything, they just didn't explain it all. The only ones who should be disappointed are the fans who wanted the show to go in a different direction completely. I also would have enjoyed it if they had made Dharma the antagonists instead of introducing the MIB as the central nemesis. I liked the sci-fi of the show too, but I'm left satisfied that Dharma was just a period in time for the island.
