In common with most other cultures, the Otherworld is the Celtic land of the Dead, but it is far more than simply that. It is, particularly in the Welsh Otherworld of Annwfn, almost a paradisiacal fantasy land that has recognisable regions, regions that could, in some ways, be equated with the three regions of the Greek Hades, but even that equation does not really compare with the amazing beauty of the Celtic concept of a land other than their own.
The most usual icon of the Otherworld is a cauldron of plenty, a cauldron that, so most authorities now agree, later inspired the stories of the Holy Grail of Arthurian fame. This cauldron appears all over the Celtic lands, from the cauldron of the Daghdha in Ireland, to that of Arawn in Wales and far beyond.
The Otherworld is certainly a land of the dead, but even the dead are not constrained, for many stories exist of mortals who travel to the Otherworld and subsequently return. It is in this sense, therefore, a transitory realm from which souls are reborn, sometimes as the same person, and sometimes as a completely new person.
It is also the land of the gods, for the Celtic theology is peculiar in having no definition for heaven. The Irish Tuatha dé Danann inhabit their Sídh, or earthern barrows, which are, in reality, prehistoric burial chambers. They were awarded this realm by the Sons of Mìl Éspáine, the first mortals to inhabit Ireland, the passage from wordly to Otherwordly beings signifying the transition of Ireland from a mythical land of the gods to a historical land of mortals.
Hades - the Kingdom | Myths and Legends
Tuatha de Danann | Myths and Legends