Everyone died on the plane crash, the plane actually sunk to the bottom of the ocean. Everyone who "survived" went to the Island, which was a type of purgatory. The survivors had to discover an afterlife for them all to live in. They actually find the sunk plane in the real world, and when new people arrive on the island, they remember hearing about the lost flight and the dead passengers whose bodies were found inside the plane. At one point, a couple survivors escape the island and go back to the real world, but eventually they come to find they no longer belong in the land of the living and head back. The big focal point near the end is where a nuclear-weapons-like device goes off and there's a new storyline where the plane doesn't crash. This new storyline is where the survivors finally found a happy afterlife to live in together. They end up reliving all the major events of the first season, and as they do, they remember their lives on the island and their relationships with each other.