Calhoun07 gave this LOST explanation on the DVDTalk boards. His theories for this season have held up very well:
“Sorry, but no…the bomb did NOT create two time lines. There is nothing we’ve seen within the confines of the TV show that justifies that theory. It’s simple…the bomb DID go off. However, it didn’t have the result Jack and the gang expected…it didn’t destroy the island. It simply stopped the electormagnetic force from destroying the island. Thus the creation of the hatch, thus the need for radiation suits for several years following, thus the entire “incident” in the first place…and the whole chain of events that led up to the plane crash in 2004.
“When there is a reset at the end of this season there will be no bomb to go off because in the reset our heroes get to live their lives without the influence of Jacob…he’s DEAD…and Jack nor anybody else for that matter will take over for him. Jacob failed in his attempt to find a replacement. Because the bomb never goes off in this reset, the electormagnetic force destroys the island after they tap into it and causes the island to sink underwater. No island, no crash, lives lived normally and happily ever after for the most part. And it’s all one straight timeline.” (via Lost — “Recon” — 3/16/10 - Page 12 - DVD Talk Forum)