It seems to be the popular opinion that the Sideways world was some kind of afterlife. That it exists where all the characters are dead and meet up again. I however, don't believe this to actually be the case. I think there's plenty of examples that support both theories and that's exactly what the brilliant creators of LOST intended. To keep the discussion going for some time after the series finally ended. I'd say, mission accomplished!
I believe everyone is alive in the Sideways world and the scene at the church was not actually a place for them to move on in the afterlife. I also believe everyone at the church, with the exception of Christian, was still alive. The church is at a place that exists outside our concept of linear time. So, it's both before and after they died. This makes perfect sense given the location of the church. Remember that's the same church where the group met up with Eloise and discovered the Lamp Post was below. So, we already know that's a special place. There's no reason to believe there isn't still a Dharma station underneath or, if not, at least the special properties that the Lamp Post held.
Let's look at the conversation between Jack and Christian in the church:
Christian: Hey, Kiddo
Jack: Dad?
C:. Hello, Jack
J: I don't understand, you died.
C: Yeah, yes, I did.
J: Then How are you here right now? How are you here? I died, too.
C: It's Okay, It's Okay, It's okay, son.
So, Jack knows he died. However, I don't think that means he's actually dead at the church. He died on the island and that's what he knows, because he had his island memories by that point. And because he was dead on the island and had those memories, he could now see his father, who was dead in both worlds. When Christian goes out into the church, we don't see him interacting with anyone other than Jack, which tells me that none of the others are dead in the Sideways world. I'll have more examples backing my theory up later.
C: It's a fact that I love you too, son.
J: Are you real?
C: I sure hope so. Yeah, I'm real, you're real. Everything's ever happened to you is real. All those people in the church, they're all real, too.
J: They're all dead?
C: Everyone dies sometimes, kiddo. Some of them before you; some long after you.
Someone tried telling me that Christian says everyone is dead, but he didn't. This is the conversation word for word from the show and he actually just says everyone dies. And, well, we do all die, but I still don't think that means they were all dead in the church. Notice how Christian didn't agree with Jack and say they are all dead. In fact, the only one in the church that I believe was actually dead in the Sideways world is Christian.
There are also people who believe everyone died when Flight 815 crashed on the island. This drives me batty. They did not die. If the island was some sort of purgatory, then 1) how did we see people dying on the island and 2) why would there have ever been any other kind of Sideways world? There just seems to be no logic behind that theory. Not to mention Christian said everything that ever happened to Jack was real. To me, if they'd all died in the plane crash, then what we saw on the island wouldn't have been real, not to mention if the Sideways world was some kind of afterlife, I don't think it'd be real either.
J: Then why are they here now?
If Jack thought everyone in the church was dead, then why would he be asking why they are there with him? It could be argued that he wonders why they are there and haven't moved on, but I think he just meant why have they all been brought together.
C: Where? There is no now here.
Christian saying this just backs up what I said about the church being outside of linear time. It was not 'now'. It was outside of 'now'.
J: Where are we dad?
C: This is the place that you all made together, so that you could find one another. The most important part of your life was the time you've spent with these people.That's why all of you are here. Nobody does it all alone, Jack. You needed them and they needed you.
Some people think the finale was seen through Jack's eyes. That everyone at the church was there because they were important in Jack's life. So, that explains why Penny was there, even though she was never on the island, and why someone like Helen wasn't. However, if it's people who were important to Jack, then where on earth was his mother? She was certainly important to Jack in both worlds. Also, Christian said it was a place they all created together. If that's so, then that implies it's not just people that were important to Jack, but important to all of them. Those important to Charlie, Claire, Desmond, etc... Of course, if we say they were all dead then that begs more questions, which I'll address in a bit.
J: For what?
C: To remember. And... to... let go.
J: Kate, she said we were leaving.
C: Not leave, no. Moving on.
Remembering the island was important. They needed to remember each other because they were important to each other. If they were important to each other on the island it was highly likely they were still important to each other in the Sideways world, which was certainly made obvious. We saw many, many examples of this. Ben and Locke becoming friends and being there for each other as teachers. Jack performing Locke's surgery, etc, etc...
Moving on could be seen as leaving limbo or purgatory or simply the world they created and finally moving on in peace after they've died. But it could also mean moving on with their lives. They needed to be able to let go of their pasts and to be happy and guilt free from anything that may have happened to them in both worlds. Locke felt guilt about his father being paralyzed. Jack seemed to think he still needed to fix everything. They all needed to learn to let go of those things in that life and to also let go of the pasts from the original time line. But only after they remembered their pasts from their previous lives, could they truly let go of them and move on in their lives in the Sideways world.
J: Where are we going?
C: Let's go find out.
And, naturally, many seem to believe this meant moving on in death. In fact, when Christian opens the doors to the church we see a bright, white light which implies they are supposed to move on to heaven. But we don't really know where that was supposed to be. Maybe it was just showing that they were going on with their lives. Also, if you look at that scene, just after the doors are opened, everyone is looking toward the front of the church, not the back. I don't know exactly what that means, but I thought it was interesting.
My friend Ben Lundy had this to say about the light. It is just so beautifully said.
I think the beauty of it is that it doesn't spell it out to you. You can believe that they moved on to a dream, the afterlife, another dimension, whatever you want. But the point is that the most profound moments in these people's lives were together, on the Island, and that fate would continue to bring them together, wherever in the universe they may be.
Ben does think the Sideways world was the afterlife, but I still like what he says here about where they may have gone after entering the light:
I like to think that they went back to the Island, but an idealized version of the Island, where they could all live together happily and recreate the most important period of their lives. If you don't like that, you can imagine your own ending. To me that's much better than being told explicitly the fates of our beloved Losties.
I especially like that he says you can imagine your own ending. After all, we don't really know what happened after we saw that light. Before Ben said this, I never thought about them all going to the island together. I actually love that thought. I mean, I thought that was why Des was rounding them all up, but once I saw them all at the church I'd decided I didn't think they were supposed to go back. But after Ben suggested that, I could totally see them all leaving together to return to the island. (Even if not exactly same version Ben was thinking of).
Here are more reasons why I don't think anyone, other than Christian, was dead in the Sideways world:
Desmond and Penny's son, Charlie, was missing. If we are to believe everyone in the original time line died at some point and later met at the church, then little Charlie would be a few years old, if not older. Same goes for Aaron. He was 3 years old in the original time line. Why is he suddenly a baby in the Sideways, if he was really dead?
Also, why didn't Eloise want Des to take Daniel with him? If she was dead, why wouldn't she just go with him to move on? That seems like very good proof that maybe they were indeed going back to the island. Eloise wouldn't want to lose her son again to the island. Why wasn't Helen with Locke? There was no indication their relationship was having any trouble in the Sideways, so why wouldn't she be with him at the church, if they were all dead?
I can understand why Michael wasn't there, if he was stuck on the island as a whisper, but what about Walt? This is another example of how it couldn't have been through Jack's eyes, because both Michael and Walt were important to him. But then, they were also important to everyone else on the island, so if they were all dead, at least Walt should've been there.
If that's not enough to convince anyone that everyone in the Sideways world is not dead, here are more reasons I don't believe they were.
Locke on the island had a scar over his eye from the plane crash. In the Sideways he did not. Of course, he wouldn't have the scar the Sideways because of the island plane crash, but if he was the same person as on the island then he should've had the scar somehow. They could've easily written in that it came from the plane crash where he and his father were paralyzed or some other way. At least, I think the scar would've been there once Locke had his island memories returned. But, alas, no scar in the church scene, either, as seen here:
This tells me that Island Locke and Sideways Locke were not actually one and the same, but Sideways Locke did come to share the memories of Island Locke, just as all the other characters in the Sideways came to share the memories of their Island selves.
Also, if the Sideways was some kind of afterlife and was meant to be their ideal world, then why would some of the characters choose to continue living in misery? Sayid still did not have Nadia. Sun and Jin had to keep their relationship a secret from Sun's father. And what about Charlie being a druggie? Locke helped him give up the habit on the island and he'd become a better person, as a result. Why would he choose to go back to what he'd been before the island?
And that's my two cents for what it's worth!