The Smoke Monster is an electromagnetic phenomenon able to "scan and read" the electrical brain impulses of people on the island and tap into the massive pockets of electromagnetic energy there to manifest those thoughts into actual images. We've seen this done many times in the show, most recently, in "Ab Aeterno," when Smokey manifested Isabella in the Black Rock after scanning Ricardo. The explosion of Jughead in 1977 didn't neutralize the mother lode of electromagnetic energy, instead it freed it all at once, giving Smokey a massive amount of "fuel" and allowing it to manifest not just one image or two or 10 but an entire new universe, created from all the thoughts and memories of all the people scanned while visiting the island. Of course, there's one thing notably missing in this universe: any sign of Jacob. The sideways universe is literally “Lost” without Jacob. This new universe is Smokey's loophole ! in the game, a way for him to get off the island. But before he can leave, we’re guessing that everyone who was used to create this new universe must be dead in the old one (“Last one out of this crappy universe, please turn out the lights…”). And that presents a final problem for Smokey. Those damn rules that say while he can kill some of the people on the island, he can’t kill all of them, not the candidates. And that’s the game within a game: Smokey trying to figure out how to kill every living person on the island without doing it himself.
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