Maybe this is what it is happening:
1. Our survivors go back to 1977, as it had always happened, but this time they try to change things, which is something you’re not allowed to do. The “incident” that has been referred to since the beginning of the series, has always been the situation that occurred after the Dharma guys hit the underground energy pocket and everything started to fly around into the hole, and people getting hit by things and dying and all that stuff.
2. When Juliet detonated the bomb then everything changed, but you are not allowed to do that, the universe has rules: Whatever Happened, Happened. Maybe small changes can be self-corrected, but this was too big of a change to be able to self-correct, the island would have been sunk into the ocean with everyone still on it. This would have created a paradox and there would have been no way for the universe to somehow put things back on track.
3. So the solution was to split time, the effects of the bomb detonation were only felt in this new timeline, the island sunk and everybody on it died. No island, no Dharma, no Others, no plane crash.
4. The solution also included sending back the survivors to their original timeline, with no signs of any effect caused by the bomb explosion. Everything has always happened as we have witness during all past seasons.
5. Now, somehow both timelines will probably interact in the future and I’m very curious about how this will happen.
6. Or this could be all wrong.