JOEL - As far as we know the Spirit World somehow exists with us on the face of this earth. President Brigham Young declared:
"When you lay down this tabernacle, where are you going? Into the spiritual world…Where is the spirit world? It is right here. Do the good and evil spirits go together? Yes they do…. Do they go beyond the boundaries of the organized earth? No, they do not…. Can you see it with your natural eyes? No. Can you see spirits in this room? No. Suppose the Lord should touch your eyes that you might see, could you then see the spirits? Yes, as plainly as you now see bodies" [Discourses of Brigham Young, ed. John A. Widtsoe, pp. 376-81. Salt Lake City, 1946.].
Bruce R. McConkie explained,
"Until the death of Christ these two spirit abodes [paradise and hell] were separated by a great gulf, with the intermingling of their respective inhabitants strictly forbidden (Luke 16:19-31). After our Lord bridged the gulf between the two (1 Pet. 3:18-21; Moses 7:37-39), the affairs of his kingdom in the spirit world were so arranged that righteous spirits began teaching the gospel to wicked ones" (Mormon Doctrine, p. 762).
We don't know how big this "great gulf" is or was between Paradise and Prison but somehow it all exists on this earth, perhaps in another dimension, in a way that we cannot see with our mortal eyes.