In the world I'm working on right now (a setting for my Twilight game), a person's spirit is released upon death. What happens to it at that point?
Well, it's free to be acted upon by the forces of the Universe. Normally, it would float around and eventually reincarnate, or vanish after an unspecified period (of seconds or centuries). But it was discovered that, while the spirit was inviolable, it was also manipulable in this state - you could capture it, bind it to a construct or new lifeform, etc. So when the Ancients disassembled their solar system and built their new home, they did so in six dimensions. The 'mortal' realm is simply the middling point; at increasing intervals (10km, increasing by 10km each time) 'above' and 'below' this astronomical sphere, they built 'layers' of Heaven and Hell. These layers quickly begin to manifest supernatural qualities, and can be fractured into smaller regions congruent to parts of the mortal realm's surface. That surface is many millions of times greater than that of Earth, and factions in Heaven and Hell's many planes have individualised their many realms thanks to these fractures.
When a spirit is released, a gentle force acts upon its moral polarity. This force can be overcome with the proper preparations, and is how you get undead, self-reincarnations, and other things. Untended, the force will push the spirit up or down, and if the spirit is particularly 'charged', it may travel past several layers before lodging there and reincarnating.
Good spirits ascend up the hierarchy of planes (even from hell planes; redemption was always the intention of the Ancients). When your spirit ascends, you reincarnate in a form more glorious than that of your previous life. On the planes of Heaven, these are known as angels. Angels breed, creating whole races of angels, and when these creatures pass on, they too are judged by the universal force. Heaven planes are inimical to evil, and sustain life processes thanks to their very being.
Evil souls go down into the Hell planes, where they reincarnate as small, squirming, pathetic creatures in horrible environments. The aura of Hell planes is harmful to good creatures, perhaps in an effort to keep them from practicing charity on those who haven't been properly processed yet.
Some powerful creatures contain several spirits. This is very weird, but explains why the population of the higher (or lower) planes decreases as you continue. After death, these spirits scatter, and may or may not come back together again.
There's a flaw in the system, however. The Ancients never intended their multiverse to work without supervision for all these millions of years. Now, souls that plunged innumerable distances into the Hell planes, and subsequently picked up instincts for cooperation and restraint, have been judged 'better' and floated up from the depths, reincarnating as bigger and better creatures all the way. These creatures are still evil, but as they're less evil, they've been rewarded. These are the demons, and they're often troublesome.
For plane travel and the drive for exploration are not limited to the mortal realms. Demons and angels are quite capable of moving around, just as mortal adventurers are. (I use 'adventurer' in the historical sense, of someone who sets off on perilous journeys in hope of finding profit.) This has led to some very interesting chapters in history; the Riftsea Region (hey, I'm not gonna map out every iota of a world where one plane alone contains hundreds of millions of countries) has been wracked by two wars resulting from one demon invasion (and the second war was a reaction to an angelic invasion in territory the demons had claimed), and a mass migration caused when the first lot of demons decided they couldn't conquer the mortal world, so they invaded their demonic neighbour realm instead; refugees fled to the mortal realm, where they carved out their own little empire.
Planar explorers haven't found a limit to the ascent and descent of the planes of Heaven and Hell yet. This is in sharp contrast to the elemental realms, which (if the spiritual planes are up and down) form the points of a compass in spatial dimensions 4, 5 and 6; they are a set distance away, and there's nothing beyond them but double-infinite vacuum.
This setup allows just about any kind of afterlife, any kind of upper and lower planes, and any kind of upper or lower lifeform (I've got angels that have more in common with xenomorph queens, and demons who overthrew their wicked leaders and now wander around the world going, 'ooh, shiny' on their cellphone implants, just in the one region).