The Netherworld is the land of the dead and is made up of an infinite number of realms. It is the place where souls go upon death and transform into the folks that inhabit the realms. The heart of the Netherworld is a realm called the Netherworld Core.
There is only one night of the year where humans can enter the Netherworld, this is called the 'Night of Samhain'. If you want it badly enough, you can meet with the dead from the henge in Doolin. However, during the course of the storyline, you find out that this isn't strictly true and there is another way to enter - by offering a Memento of the dead at the henge.
A human entering the land of the dead must first protect themselves by wearing a cloak or they will eventually transform into a folk. An example of this would be Phutcampus.
Once a door to the Netherworld has opened, it will look like a huge glowing symbol and will only be visible at night. To enter the door to this realm, walk up to the foot of the symbol and press Button x. To leave the Netherworld, you must find and use a portal.