Neo sacrificed himself by allowing Smith to assimilate him. They cancelled each other out or the machines sent a virus destroying Smith. The "real world" Neo supposedly died during the process. The machines, because of the deal, allowed the humans the choice to live in the matrix or in the "real world." What happens after that will be told through "The Matrix Online." Want me to be more specific?
Alright, I'll explain what I believe (I've only seen Rev once but I'm sure I know) Neo, was fighting smith and he pretty much got an Arse whoopin, so he gets up and smith is asking him why he does it and neo says "Because I choose to" He then realizes about how smith is neo's negative. That is why he lets smith do the virus thing on him because he knows that he is the 1 and smith is his opposite -1 and apparently neo can add/subtract and he knows that the architect's purpose is to balance the equation so...let's do the math shall we... 1+ -1=....ZERO BOYS AND GIRLS. the thing the machines did to neo while he was smith, I think it was the architect balancing the equation making it zero. and as we all know, children, zero means nothing so smith and all of his counterparts were cancelled out, as well as neo i'm afraid...that is my theory.
Smith: Why, Mr. Anderson. Why do you persist?! Neo: because I choose to...