I have offered a number of small theories about certain aspects and sub-plots of “Lost” over the years, theories that were usually completely off base (and that’s the beauty of Lost: it’s completely unpredictable). However, I never offered a “global” theory about the show, e.g. what is the island, or what is the smoke monster. So here is my crazy theory contribution for this crazy show. Of course, my theory is highly influenced/biased by my artificial intelligence work in the past and my computing experience.
So, deep under the island, there is one big ass computer. The “intelligence” of the island, is just artificial intelligence driven by that computer. The computer is able to harness the special properties of the island and affect matter. Hence, the existence of the smoke monster and its various manifestations (which is nothing but the physical representation of the computer in the island through some pseudo-science physics), and the ability to affect the health of people depending on its wishes. The computer can manifest outside of the island too, but its powers are limited far away from it. As for where the island is, it can be somewhere in the Pacific, or in another dimension all together — this will be for the writers to decide.
The four-toe statue is a testament of an older civilization (“original inhabitants”) that ruled the island. Be it alien, or Egyptian or even Atlantian (whatever the writers find to be the least ridiculous option), they were the builders of the computer. Dharma simply came much later and tried to take over all this power for its own needs. Until the original inhabitants, keepers of the computer, revolted against them, with the help of Ben.
There are only two final outcomes you can have for the show if this theory is correct. Either the island blows up so no one can take advantage of it anymore (most likely outcome, as the Losties are sinners and represent fate and random chaos), or a few select Losties stay in it forever to be the new keepers and the island is never found again (unlikely).
UPDATE: My theory posted over at DarkUFO’s “Lost” fan site. You can discuss it there.