The story is probably very simple, the normal science fiction type story.
I think that Jacob and his Nemesis are two ancient people or even forgotten 'gods' or some supernatural or extraterrestrial beings or even ghosts granted power by the island who became entwined with human civilization (remember there are temples and broken statues on the island) and they waging an argument over many millennia over whether or not humans have good in them or whether or not they will eventually destroy themselves. That's why the whole mathematical formula for showing the date when humanity will destroy themselves and why Dharma was trying to change the formula are so important.
Jacob's Nemesis could not directly harm Jacob for one of the usual science fiction cliche reasons that he is bound by some rules or is actually physically incapable of doing it himself.
The island for thousands of years has been an experiment, drawing people to it to fight out this argument. Jacob and his Nemesis are able to go out into the world to find suitable candidates for this at early points in their lives and set their destinies. Remember the show's concept was to be fictional version of reality gameshow like Survivor crossed with Lord of the Flies. The island is playing a reality game that resets and repeats itself in history like Zion in the Matrix. In the end, the people will be able to stop the game for good somehow and prove Jacob right.
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