So the hatch was first discovered in 111. All the Cowboys have Issues. Our heroes went inside the hatch in the Season 2 premiere. By the end of the season 2 finale, the hatch was blown up, destroyed, gone. It was after this time, we all thought the hatch's only purpose was to introduce Desmond, and to save the world every 108 minutes. This is until the Episode 308 Flashes Before Your Eyes.
This is where we see the events of what happened after Desmond turn the key that ultimately destroyed the Hatch. Of course, Desmond has traveled back in his past. When he woke up, He supposedly doesn't remember anything on the island.
Later On, He starts to get bits and pieces of his future. When he meets his friend to talk about it, He remembers a scene that already happened. It turns out that this Scene doesn't happen. Thus Desmond quits believing that he can see the future and starts to live his life (unknown to him) again.
It is not until he meets Ms. Hawking that she confirms that he Can see the future. Tells him that he is going to have a wasted life and there is nothing he can do about it. Desmond, who doesn't want to believe it, is stand-offish and goes to ask Penny to marry her.
When he breaks up with Penny, I believe he breaks up with Penny not because Hawking told him he was, but he did for his own reasons, Being a coward.
He goes to a bar, still not believing in the future, where he see a scene that already happened and it came true. He then realized that now that he knows the future, he can change things. And when he did, He got back on the island, naked, with all of his previous knowledge of the island.
And we never saw an episode like that again.
Now why did this happen in the first place? Desmond destroyed the hatch. Who destroyed the hatch in the Season 5 finale? Juliet, Jack, Sawyer, etc.
So knowing what happens after this Energy is destroyed (which Chang confirmed to have time travel powers in 501) I believe that all our Losties in 1977 are going to go back in time (despite it being 1977 THERE PAST is in 2004!) Act like it was all a dream. Relive parts of their life, and each one of them is going to remember what happened to them back on the island, and when they do they will be back in the present...with all their pre-found knowledge of the last five seasons. Though due to course-correction (which Hawking explained in 308) each one the people that died on the island, are still going to die, despite the changed time line (Desmond changed Charlie's Time line numerous times, but still died).