In life after death the experiences of pain and pleasure become much more intense than they were in earthly life. These subjective states of intensified suffering and joy are called hell and heaven. Hell and heaven are states of mind; they should not be looked upon as being places. And though subjectively they mean a great deal to the individualized soul, they are both illusions within the greater Illusion.
Desires and experiences intensified after death:
In the hell state as well as in the heaven state, desires become much more intense since they no longer require expression through the gross medium. Like desires, the experiences incurred in their fulfillment or non-fulfillment also become greatly intensified. In the earthly career desires, as well as the pleasures and the sufferings they bring, are experienced through the medium of the gross body. The soul is of course actually using its higher bodies at the same time, but in the earthly career its consciousness is bound up with the gross body. Therefore the processes of consciousness have to pass through an additional veil that lessens their force, liveliness, and intensity just as rays of light are dimmed when they are required to pass through a thick glass. During habitation in the body, desires and experiences suffer a deterioration in intensity; but when that habitation is given up, they undergo a relative increase of intensity.
-Discourses 7th Ed., p307