As promised, and just in time for tonight, a little Lost talk. Many provocative thoughts about what the monster might be in the aftermath of last week's episode (23rd Psalm) wherein we seemingly witnessed Eko's memories mirrored hazily in the black smoke like a film negative.
Some have suggested that the monster might be motes of smart dust. Others have speculated that it could be similar to the Id Monster from Forbidden Planet and/or the Montauk Monster. Combining those two theories, could the monster be an experiment in remote viewing gone awry?
Smart dust is basically a wireless network of millions of tiny sensors (or motes) that are dispersed over a region and harvest data collectively. Though smart dust has many peaceful applications, it was originally designed for battlefield surveillance. Blanket an area with the stuff and you could conceivably track the movements of anyone who comes in contact.
I think Dharma was exploring a specialized application of smart dust as part of their remote viewing experiments. More specifically, they experimented with using the mind to control clouds of dust. Remember how Walt used his powers to attract the bird in Special? Perhaps Dharma was using similarly "special" minds to control the motes electromagnetically.
At some point, however, the experiment got out of hand. Like the Id and Montauk Monsters, the cloud of smart dust took on a life of its own, and began attacking the experimenters. The Arrow Hatch was invaded, and its blast doors triggered. I'm guessing this was the incident.