The Architect explains, essentially, that the entire construct of the known world, including the Matrix itself, Zion, Neo, and the Agents, all exist as part of an intentionally dystopic society, devised by the Machines. That is, the first Matrix to which the Architect refers is claimed to have failed due to it being too perfect for humans. Agent Smith mentions the same in the first Matrix movie: it was an actual utopia; however, as humans subconsciously experience misery and suffering as an inherent part of life, they rejected it as being too perfect, and as a result, it was a monumental failure. And there was always an 'anomaly' present, a person who could control and manipulate the Matrix at his will, far beyond the abilities of the Machines.
Because of this, changes were made to the entire approach, such that instead of being able to achieve 100% satisfaction with the Matrix itself and thus achieve 100% human crop yields, a loss of 1% (hence the 99% figure) was acceptable when faced with the alternative of mass rejection (e.g., 0% human crop yields): the Matrix was programmed to be a representation of 20th century Earth, at the peak of its civilisation.
Thus, the Machines were able to control that 1% and the Anomaly, by offering them a choice, i.e. allowing them to escape from the Matrix and giving them the illusion that they could free themselves and humanity from the Machines. Zion was intentionally built as an escape for those unwilling to accept the false construct of the Matrix and was seeded with an initial core group of liberated humans, given the ultimate goal of finding "The One" (the Anomaly), who would assist them in their efforts against such an impossible chore as liberating billions of humans from their "prison" one at a time. However, due to their purpose, the number of inhabitants of Zion could only grow as they liberated increasing amounts of humans-- to the point of becoming too much of a liability; for, should too many humans be liberated, they would be a threat, both by creating excessive crop loss by exponentially liberating increasing amounts of people from the Matrix, as well as being able to threaten the machines in the real world militarily.
The only logical solution, therefore, was to regularly prune the inhabitants of Zion by exterminating all of them at once, so that nobody would remain to tell the tale. The machines would force "The One" to choose new seeds for the next Zion who would know nothing of this ploy, or they would kill all humans in stasis (and themselves, if necessary), should he refuse. The cycle would repeat over and over again. At least, that's how it normally works.
Every prior incarnation of Neo was programmed with a general dedication to the human race, such that, when given the choice between either:
* Returning to the Matrix and causing the mutually-assured destruction of both species; or,
* Allowing Zion to fall intentionally and subsequently re-seeding Zion to start the whole cycle over again,
The choice would be clear: he would undoubtedly choose re-seeding Zion (hence the reason why Neo is even speaking to the Architect in the first place). However, this particular version of the Matrix (and consequently The One) is different in that the events that were set in motion by the Oracle also foster a relationship with a particular individual of the human race-- Trinity.
At the conclusion of the third movie, the risk of allowing such a thing to happen is tentatively validated by the Architect and the Oracle in that:
* The war between humans and machines is finally able to end in peace;
* Both populations allow the other to survive due to Neo's sacrifice for both human and machine alike; and,
* Humans who, on their own volition, reject the matrix would be allowed to leave it.
Another difference in this version of the Matrix is that the One had inadvertedly 'infected' a program (Agent Smith), which caused the Matrix to make Smith increasingly stronger in order to balance the Anomaly (Neo) out. However, this countermeasure went completely unchecked to the point where Smith was a greater threat to the Machines than the humans, further forcing the Machines into seeking a compromise.
Effectively, this ends the forced enslavement of the human race (i.e., there will always be plenty who will want to remain in the Matrix as long as the Zion humans don't forcibly free them), while ensuring the mutual survival of both humans and machines (i.e., the humans will no longer be ritualistically killed, and the machines will have plenty of power from the willing inhabitants of the Matrix).