Alot of stuff to wrap your mind around in this episode. Right now I'm learning towards two realities happening concurrently.
When Juliet sets off the bomb it flashes them off the island and back to real time on Reality 1 where the plane still crashed, etc. as evidenced by the Swan station being all blown to bits from Desmond.
When Juliet sets off the bomb it also appears that the island has now sunk underwater which we see at the beginning of the episode when they get over the point of the ocean where the island is located. To me because the island is underwater the plane doesn't crash because whatever magnetic energy that may be left (does the energy ever really go away?) is contained by being under all that water.
I don't know what happens now but my instinct is telling me somehow these two realities combine in to one reality by the end of the show.


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