The general consensus regarding the flash-sideways timeline following the final revelations of “The End” seems to be that the survivors subconsciously created a shared construct for their souls in which they were required to remember their past lives and let go of them before being able to move on to an incorporeal place of peace and happiness. The common analogy being drawn is that of Purgatory as a interlude between life on earth and eternity in Heaven.
However, my interpretation of the flash-sideways timeline is closer in resemblance to the Christian belief in the bodily Resurrection of the dead than to the above-mentioned Catholic eschatology.
My evidence for such a conclusion is as follows: firstly, Christian Shephard emphasizes the reality of the flash-sideways timeline. Such concreteness would preclude the possibility that an individual such as David Shephard is a mere figment of Jack’s psyche existing only to elicit a response from Jack.
Secondly, Daniel Widmore seemed to confirm to Desmond that the flash-sideways universe exists as a direct result of the hydrogen bomb exploding at the Swan site, indicating that the reboot both worked and failed in respect to each timeline. (This itself is analogous to the concept of multiple-histories for particles in quantum mechanics, and retaining this understanding of the flash-sideways timeline would, from a narrative standpoint, help to preserve the balance of science and faith in Lost).
The reboot in turn leads to my main hypothesis: the survivors “created” the flash-sideways timeline not as a construct for their souls by means of their collective consciousnesses, but rather as a genuine physical reality by means the hydrogen bomb explosion. This was not their intent at the time, but providentially it became a place where they could find one another. The flash-sideways timeline had become for them, in terms of Christian theology, not Purgatory but the New Creation.
Their reawakening, in turn, may then be seen as a type of Resurrection, particularly in the sense that they retain the memories of a “previous” life while at the same time being given new life on a New Earth, one in which they are free from their past sins and live in true fellowship and harmony with one another.
As far as Christian Shephards comments that there is no time in that place, one way of reconciling that statement with my hypothesis would be to mean that the two timelines are not parallel. The 2004 of the flash-sideways timeline takes place neither before, during, or after the events of the original timeline.
Understood from this perspective, the events of the finale may be summarized as thus: Jack battles and destroys evil incarnate, descends into “hell,” restores the divine light to a world left in darkness (suffering a sacrificial death to do so), and is resurrected alongside those in his Church upon a new and perfect creation.