It was designed by the DHARMA Initiative, and would of originally been used to wipe out human populations around the world, so that DHARMA could repopulate the earth with their "modified" humans that were in harmony with "the one true way".
The 'Jughead' hydrogen bomb is buried at the Tempest station and the gases are still escaping and leaking from the bomb. These escaped gases are harvested for the manufacture of the toxic gas used during the purge.
We can be pretty sure now that Jughead was buried at the site of the Swan.
The symptoms of inhaling the gas are quite similar to time traveling sickness, so possibly this nerve gas simulates the effect of being stuck in time and overloads the brain.