I'll attempt to explain to you the whole thing

Rating: Null/10 (7 November 2003)

Nevermind the Architects speech. It's really quite logical (Spoilers may be ahead).

The machines dominate the world. They take their energy from humans, who are kept captive in pods.

The Matrix is a virtual-reality environment where those humans are plugged into, in order to have a "life" of sorts. When they are in the matrix, they become computer programs.

There are humans that have escaped and live in a state of war with the machines. They also use the Matrix to fight their war. One caveat, if you die while on the Matrix, you die in real life. You may want to assume it's because what goes to the Matrix is your soul or you may also explain it by saying that the emotions of dying are too strong for the body to survive.

But being a computer generated environment, The Matrix has other habitants as well. The Agents (Smith is one at the beginning) are programs designed to hunt humans on the Matrix. The Merovigian, The Trainman, The Girl, etc, are all programs, they only look human on the Matrix. The Oracle is the most interesting one, is a program that "predicts" the future not because it has extraordinary powers, but because it analyzes situations and players and predicts what will happen if the players make a certain choice. It's no different that chess.

Neo is an anomaly, a humn with extraordinary powers that allow him to connect to the Matrix and bend the environment for his purposes. That's why he's the One.

Agent Smith becomes a virus, because he wants to control the Matrix. He surmises that it will allow him to control both humans and machines. the reason he multiplies is because, much like certain viruses, he infects other programs on the Matrix and makes copies of himself.

Neo realizes that the machines are going to win, and the only way to stop them is to make an alliance to get rid of Smith, which threatens the machines because the more programs he infects in the Matrix, the more humans he controls and the machines depend on the human energy. he could, for example, start killing clones, and the humans on the pods will die as well. The machines can't kill Smith using agents, but Neo can. At the end, Neo lets Smith infect him, but because he's plugged via the machines, it's easy for the machines to kill Neo and therefore Smith.