If you've talked with Snake Eyes, he gives you a pretty apt description of what the Underworld is like. To the left of the giant courthouse is the lands of Tartarus, a lawless, fiery land where condemned souls fight to survive every waking moment. The tallest buildings in Tartarus are hollowed out spires for the souls to call home, but they still need to watch out for monsters and, of course, other thugs and criminals living in the city. Of course, it's possible, but really rare, to escape Tartarus through kindness and switch cities.
To the right is the city of gold and lights, Elysium. The souls that reside in this city are virtuous, wise, creative, and naturally good spirits. They do not need to worry for survival, and they are free to do as they choose until their next life, so long as they continue their good will.
The Courthouse is where the more angelic creatures reside to cast judgement on the torrent of souls that come in at a constant pace. Each soul's sins are weighed and cast into whatever city is deemed fitting. Of course, if there is someone on the surface that committed a crime that threatens the foundation of both the underworld and the overworld, the soul could face the ultimate punishment, erasure.
At this very moment, a pony is being put into trial upon her death. However, because of her acts of necromancy, her soul may not exist anymore…