I have a theory regarding the balance of good and evil. It also involves the Black Rock as well how he island may have sunk. It sorta came to me after Flocke told Ben to meet them all at Hydra Island.
Maybe Jacob and MIB each had their own island. Main island and Hydra island. It may be possible that these 2 islands can rise or sink like a scale, when either side is winning.
In the flash sideways timeline, maybe MIB won or is winning the war which is why main island has sunk. Hydra island could be above water and we simply weren't shown that.
When the Black Rock arrived, it could be that MIB began winning and the main island sunk while Hydra came up. Then Jacob started winning, the scale was tipped and VOILA, that's how the Black Rock ended up so far inland.