We really do not know how it was created; what it is made of; how it manifests itself in time and space; or why it is the island's "security system." We know it is capable of being a shape shifting pillar of smoke with the memories of dead people.
We believe that Crazy Mother was a smoke monster. We saw that she destroyed the Roman camp in the same after math as the smoke monster destroying the Barracks when Widmore's soldiers returned to the island. And there are ancient Egyptian hieroglyphs at the temple depicting the smoke monster. So the evidence shows that a smoke monster was on the island prior to Jacob's brother's death.
Since Crazy Mother was a smoke monster, we know that she was killed only after she passed on her "guardianship" of the island to Jacob in a ceremony near the light cave. Once she did that, Jacob's brother stabbed her with a special knife. It is unclear whether she allowed the fatal blow or was defenseless, considering that Sayid's attempt to kill MIB was thwarted by mere words with Flocke.
And was Crazy Mother's ceremony to grant Jacob the knowledge of the island also a transformation of Jacob himself into a smoke monster? It is possible since Jacob did not know about the island's properties - - - just as Jacob transferred his authority to Jack at the last camp fire. But then, Jack would have become a smoke monster. And if Crazy Mother's rules were correct, that smoke beings could not kill each other, then Jack's turning over the guardianship to Hurley (unknown to Flocke) plus Kate's bullet could have killed Flocke.
If one sees the evidence that a smoke monster's shape shifting and memory stealing abilities is tied to engulfing a dead body, then there are more issues to explain. The series does point to the abilities to talk to the dead or read their last memories (Hurley and Miles). The smoke monster must have those same abilities in order to transform itself into dead people.
But there is one problem with the first incarnation. Christian's body was not on Flight 815. The coffin was empty. In the sideways arc, the body arrives weeks later. So if Christian's body was not deposited on the island, then where did the smoke monster get the information to create a Christian body double? The only logical means would be to read Jack's mind.
But this leads to an uncomfortable detour for some fans. If the smoke monster can only shape shift based upon reading the memories of the dead, then that would mean that Jack was dead on the island. He did not survive the plane crash. Jack was not the only example of a memory swipe to create an illusion on the island. Kate saw her horse in the jungle, but her horse was not on the plane. Then we have Hurley interacting physically with Dave, his imaginary friend. Was Dave on the island another smoke monster manifestation, urging Hurley to kill himself (because he was a candidate)?
We also have the situation of Mr. Eko talking directly to his dead brother Yemi. Yemi was the priest who was captured by the drug smugglers at the airport during a firefight with police. Eko assumed his brother's life. On the island, the smuggler's plane was found - - - with the body of Yemi. Now, it impossible for a small plane to fly from Africa to the middle of the Pacific Ocean. Most people believe that the plane crash and Yemi's body were manufactured by the smoke monster. If that is true, then the smoke monster would have had to read Eko's memories - - - again, meaning that Eko died in the plane crash.
The same holds true for Richard Alpert, when he sees his dead wife, Isabella on the island. The first time was when he was in the hold of the Black Rock, as the smoke monster was killing the survivors. The second time was near the end, when he saw her with Hurley near Alpert's special spot (where he buried her jewelry).
If the smoke monster was re-creating persons from the island inhabitants past, what was the reason?
The simple answer is that the smoke monster wanted the people to do something. Ghost Walt stood over the purge grave telling a bleeding Locke to get up because he still "had work to do." Ghost Alex confronted Ben in the temple, scolding him with guilt, to follow everything Flocke (MIB) told him to do (which led to the killing of Jacob.) Ghost Horace told Locke about Jacob's cabin and foreshadowed the danger that island leaders encounter on the island.
The one oddity is that in all the creations of dead people, the smoke monster had the most freedom, interaction and interpretation as Jacob's brother, MIB. In that form, MIB seemed to be an equal with Jacob. MIB called Jacob "the devil." However, in MIB's form, the smoke monster must have fused in Jacob's brother's last strong emotions: to leave the island. MIB's quest for centuries thereafter was to leave the island. But for no apparent reason, MIB or the smoke monster could not.
Which leads to another problem. When Jack returned to the mainland as an O6 survivor, he found Ghost Christian in the lobby of the medical building. The smoke detector went off, and Jack went to investigate. If this was a shape shifting smoke monster, but not MIB (who could not leave the island), then it had to be Jacob. That would mean Jacob himself was a smoke monster.
The grant of immortality to people on the island by Jacob may have been a ruse of a truth. With Alpert, being dead was itself being immortal. But Alpert did not know his fate so he could be conned into the service of Jacob.
So in all the smoke monsters manifestations, it is not perfectly clear who or what the smoke monster was in every situation. In one sense, the smoke monster was an information gathering machine. In another sense, it was an angry amalgamation of dead souls trapped in an island purgatory. No one can say for sure whether the smoke monster was good, evil or merely confused. It killed both good people, bad people, sinners and followers.
What we can say is that the smoke monster by definition is the visible suspension of carbon or other particles in air, typically one emitted from a burning substance, which some theorists minds would represent carbon (the basis of human life) being burnt in hell.
It could also mean to fumigate, cleanse, or purify by exposure to smoke, which also fits into the underworld judgment theme. It could also mean to force someone to make something known: as the press smokes him out on other human rights issues, he will be revealed as a social conservative. If this is a character study, then putting the characters under stressful situations to make them change would be a story alternative.
A monster is an imaginary creature that is typically large, ugly, and frightening. This would fit into the illusion themes of the series. It can also be used to describe an inhumanly cruel or wicked person. There were many cruel and evil characters on the show who did not repress their cruelty onto others.
If you put both definitions together, smoke is an description of the main word. One could say the smoke monster is a purifying imaginary creature forcing characters to make something known to themselves. Whether that something is overcoming an inner fear, regrets about relationships or acknowledging their own demise, that could have been the smoke monster's role.
