I mentined it on the episode thread, but I'll repeat in brief.
The bagua is fundamental to understanding the way things are. It is a basic concept in Chinese Philosophy that is over-arching.
I looked a few things up some in Feng Shui practice do use it to ward off evil, so that is how they may be use.
All things on the island, like all things in life are in constant transformation. the Bagua and the I Ching which is the 8 trigrams of the Bagua (and I noticed this is the newer arrangement of the Bagua not the older one I am use to for Tai Chi uses) combined in all ways.
It is about transformation and change and we've seen that on the show (like Locke walking) and the whole Yin and Yang thing does harken to all things being inter-related and all the people on the island have these odd inter-relations.
But it could be a red herring and used because it is very iconic and kinda cool.
http://qi-journal.com/Philosophy.asp?-token.SearchID=EightTrigrams discusses the trigrams and the various arrangements
Here is a quote about the arrangements of the trigrams. this is the Later Heaven arrangement.
"When looking at the Later Heaven (King Wen) arrangement, we read the progressive pattern along the periphery in a clockwise rotation. Reading the trigrams in a circular arrangement symbolizes the elements of infinity and continuity. The movement in this arrangement flows from the superficial qualities to deep qualities, from new life to maturation of life, and from the physical existence to the spiritual existence.
Whereas the Early Heaven (Fu Hsi) arrangement is based on a balance of opposing forces representing a primordial order based in stillness and beyond space and time parameters, the Later Heaven arrangement depicts the development of life in the time-spaced conditioned world."
We usually use the Early Heaven one in Tai Chi as that martial art is a lot about balancing opposing forces.
Usint the Later Heaven one could be symbolic of the show because of the flowing from one state into another that seems to fit better.