The Underworld is most likely a manifestation of the Bardo State.
Someone asked whether rebirth is instantaneous (as argued by Theravada Buddhists) or if there was an Intermediate State (as argued by Tibetan Buddhists).
In my considered opinion, both explanations are valid. Depending on your point of view, of course.
It can be considered instantaneous because there is no such thing as “dead” people. The continuum of causality continues unabated. There is no gap, no stopping, and no “otherworld” in which you might have existed in prior to being “reborn”.
The continuum of causality that is fluid and hasn’t yet achieved a stable homeostasis is what we might call the Bardo state. It is Bardo because it has not settled down into a stable ecosystem of inter-penetrating phenomena.
How long does the Bardo state last after one is in the throes of the post-death process?
Contrary to Tibetan Buddhist belief in 49 days, I believe the Bardo could be instantaneous to millions of years, depending on the causal factors that is shaping it. Of course, time can be very subjective in this hallucinatory state.
I also believe that manifestations of Yama (a deity described as the God of the Dead in Vedic mythology) or an Underworld (not to be confused with Hell) is part of the Bardo State.
In certain mythologies, such as that of China, it is believed that the deceased will appear in the Underworld (Diyu) before being reborn. This doesn’t fit into Buddhist metaphysics…unless we accept that the Underworld is a hallucination of the Bardo state.
Hellworlds (Naraka) are proper rebirths, for it has a stable homeostasis, much like the life we currently experience. Hell-beings are living beings, every bit as alive as you and I (and plants and animals). They are not “ghosts” and not “spiritual” substances or existences. Nor are they “damned” in the eschatological or spiritual sense. Please note that the Vedic Underworld also use the term Naraka, but Buddhism use this term to mean a different concept entirely. It is blurry in Chinese mythology as well, because the Narakas were simplified into 18 Planes of torturous existences (of course, real Buddhist cosmology doesn’t have this schema, rather, the Hellworlds are infinite in number).
In contrast to Hellworlds, the mythological Underworld of China is described as a transitory state before going to a proper rebirth, and Yama himself is described as a psycopomp. These key factors mark them out to be most likely a Bardo aspect rather than a literal realm. How can there be an extrinsic world of the dead? Such a thing is ontologically impossible in Buddhism.
Consider also that there is duration in the Underworld, and the Underworld process is not a real rebirth, they must therefore be of the Bardo.
They are manifestation of mind, but we must remember that mind-body dualism doesn’t exist and all that is mind is part of the process of the “real” (per the view formulated by the Yogacara School and accepted in all Mahayana and Vajrayana schools). In this sense, Yama and the Underworld are nonetheless real (or as real as any phenomena can be)…but their manifestation during the Bardo process might be entirely subjective to each person’s beliefs and biases.
*I meant the Chinese Underworld, but one may consider the parallel to the Platonic Hades. In the Legend of Er, Hades is a place where souls go to be reincarnated (metempsychosis), they drink from the River Lethe to forget their memories, and their destinies are presided over by the Fates, the twin wheels (the constellations and planets), and by Hades himself. They draw lots and choose what they are inclined to as a consequence of their circumstances in life (which is a very karmic take). This is indeed, more or less, the same set up as Chinese mythology.