I don't know if I'm just behind and everyone else thought of this months ago, but I'll say it anyway:
Mother made it impossible for Jacob and MiB to kill each other. *Zoom over to the finale... Desmond is lowered into the cave and sees skeletons all over the ground. I always had a little annoyance thinking "Oh so are all those people smoke monsters as well..." until now! Let's say those skeletons are Egyptians. Let's say the Egyptians came and built all the stuff, and the protector on the island made one of them the protector. The new protector stumbled across this magical cave one day and went "hmm, wonder what's in there?" so he brought over his slaves and such and ordered them to go down there.
When they got down there, they found a hole in the ground filled with water. The water flowing under the island had eroded walls underground and therefore flowed out of what looked to be like little passageways. All the water came to that one place, which eventually eroded away a small hole. The egyptians did not die from going down, however, because they hadn't stepped into the light...yet.
At the time there was not as much light in the "hole". Simply because the water had not eroded the ground away enough to create a big hole yet. Similar to drilling at the Swan Station, this erosion would hit the electromagnetic light and send it flying out. Ouch.
The Egyptian's told the protector what they'd seen. They sent more down there with tools, and began to work. Being the protector, he could sense something down there. Almost ready to burst. The Egyptian's dug and dug and made the hole for the water nice and round with nice stones on it. Then they hit a little hole. Uh-oh. Light began rushing out. It killed the man in it. He stumbled out and collapsed on the ground. One skeleton.
The protector immediately ordered to create a "cork" to plug the hole they had made. The light was rushing out more slowly now, at a better pace. This gave them enough time to make the cork and make it fit. They placed it in, and it stopped. Hooray!
But there were other holes and little indents they had made, also the light that had rushed out. It filled the cave and eventually settled into the water hole. This created the balance of light and water that we see in "The End".
We may have even seem something similar as to what Jack did to Hurley before he went into the cave. The egyptian protector made someone else the protector, then he descended into the cave to fix the mistake he made. The skeletons are him and his workmen, dead from the electromagnetism.
Now, why was the MiB turned into the smoke monster instead of dying? As I said at the beginning of the post, because Jacob can't kill him. If MiB had simply tripped and slipped in the creek, smacked his head, and rolled into the cave, without Jacob doing anything, he would have died. But since Jacob did it, the light rushed into an immortal soul. This effect was...something that Jacob never would have imagined happening. The light broke up his molecules and transformed him into what appears to be a pillar of black smoke. He was also linked to the light, and could use people's dead bodies and look like them, use their memories, behave like them. He also gained the ability of a sixth sense and the ability to move objects with his mind.
See, it's not so hard to fill in the blanks! :) Do you guys like my theory?