I took it as this:
The entire flash-sideways subplot was a form of purgatory. Richard, Lapidus, Miles, Sawyer, Kate, and Claire flew off the island and lived out their lives. Hurley and Ben stayed back and took care of things for the rest of their own. Desmond was sent back to Penny via some unexplained method that Hurley and Ben must have discovered, and eventually the two passed away together as well.
The purgatory was created for the entire group once the last Oceanic member died in the original timeline, with Christian as their guardian angel or "shepherd" (har har). In order to gain access to heaven, they all had to rediscover their former selves in the context of their false lives in the flash-sideways...like a final trial or rebirth.
I'm assuming Anna Lucia, Nikki, Paulo, Mr. Eko, and Michael were too

ed up and got sent to hell. Ben is kind of in the middle of things, so I'm assuming he's spending more time in purgatory. I don't know why Penny, Desmond, and Juliette would be included with the Oceanic crew, other than a "love conquers all" kind of deal. As far as Walt, who the

knows.
Now, I think I have a firm understanding of it, but I'm still not entirely happy with the direction they took. In short- FUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU