THE world of spirits is neither heaven nor hell but a place or state between the two. It is where we first arrive after death, being in due time either raised into heaven or cast into hell from it depending on our life in this world.
The world of spirits is a place halfway between heaven and hell, and it is also our own halfway state after death. I have been shown that it is a halfway place by seeing that the hells were underneath it and the heavens above it, and that it is a halfway state by learning that as long as we are in it, we are not yet in either heaven or hell.
A state of heaven for us is the union of what is good and true within us, and a state of hell is a union of what is evil and false within us. When the good in a spirit-person is united to the true, then that individual arrives in heaven, because as already stated that union is heaven within us. On the other hand, when the evil is united to the false within us, then we arrive in hell, because that union is hell within us. The process of union takes place in the world of spirits because then we are in a halfway state. It amounts to the same thing whether you say the union of intellect and will or the union of the true and the good.
from Heaven and Hell, Sections 421, 422