Might want to put that in spoilers until the day's up (All regions haven't aired it yet).
My response to your question :
Spoiler: Show
Yes, they're all dead. The present timeline was part one a type of purgatory. The characters were all flawed in some way or another, or what we can call Lost. The good and bad events that transpired on the island in the "present" universe helped them resolve their issues so that they can finally let go of the living world. Finally, part two of the purgatory, was the alternate loop that was created to help them find each other so they can finally move on. To where? We'll that's up to you. For me, it's a type of heaven where each character gets to enjoy their idea life.
PS: These are just my ideas. The show ended in such a fashion where you can interpret in a number of ways and be "right". It's all up what you believe. That's the beauty of the show.
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