Everything on the island really happened - they really crashed, there really was a polar bear, Dharma, The Others, Smoke Monster, Jacob, etc, etc.
Once they died, they went to the 'place they created together' - ie, the flash sideways. This was life as they would have liked it to be - eg Sawyer being a cop instead of a conman, Kate being innocent, Jack being a good Dad etc. Jack's dad said 'everyone dies sometime', so some of them died before Jack at the end, eg Juliet, Libby and some after, eg Kate, Sawyer (who flew off the island) and Hurley who stayed to guard the island until it was time for the next keeper to take over and let Hurley die and move on.
They couldn't 'move on together' until Jack had accepted his death, and Jack always had a hard time accepting stuff! Once he did, the doors opened and the light came in.
The reason some people were in the church and not others is to do with the journey they shared together and how important they were to each other. Michael , Walt, Ana Lucia etc weren't that important to Jack (it was his story really), so they weren't there. Penny for example, never set foot on the island, but was important to Desmond, who, in turn was very important to Jack, so she was there.
There are still so many big questions not answered, such as why did Eloise Widmore know so much and how, what was Charles Widmore trying to do, and all the other secrets of the island, but this is the mystery that is Lost
The story stopped being about the island a while ago and became more about the characters and their personal battles.
Well, that's my take on it anyway