Oh my goodness I've just learned a thing about The Matrix that causes it to make a lot more sense: In the original script the humans were used as neural network compute clusters by the Machines and as a crucial component of The Matrix itself.
Which is why humans who were aware of the simulation could control aspects of The Matrix - their minds were part of its foundation.
Unfortunately the test audiences had trouble understanding this concept so the studio changed the human role to "batteries".
@ersatzmaus personally I figured the machines were initially fighting for survival rather than out of hate, and then shoved humanity into a fake paradise where they can always be happy while leaving the machines be (and serving a useful function while at it). But humanity could not accept a paradise as real so they settled on just about the right amount of boring misery (the 90's) to keep human "happy".
Meanwhile, there are those like Smith who'd rather humanity just get wiped already.
@polychrome Right. So you've got your overlord AIs who need humans - agents like Smith who (have to?) work for the overlords, but don't need the humans... It all fits.
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