A place where souls go after death, that seems to be an in between for earth and the actual afterlife. Shepherds guide the souls, they act as a balance.
we learned about it in the Bolgroth Book that rina got from Castle Frey.

#speculation What if this place was created by Luminus somehow, and so were the Shepherds. The reason souls cant move on is that Luminus's Finger's Weapons are stealing souls. maybe this is where those souls get trapped, and Luminus is taking them one by one to make them into Spliced souls. like the elemental and Golem in Greenwarf on Day 34 (S22-23)
Maybe Luminus wanted the Mt. Ivatim dungeon destroyed so that no one could enter again, because this place was somehow able to open a portal while other places could not. They wanted Gabrielle because she had made it there and came back.
The Withersalt bomb could have been to destroy a devil or something they thought was a devil. Maybe they thought the Shepherd was a devil. Someone used the End Medallion on it possibly to try to destroy its soul, but it just stopped it long enough for that person to escape. That person is probably someone from Luminus, because they had one of the Red Gem Keys when they gave it to the Fearsome 5 to go retrieve the Medallion.
Somehow Luminus knew about Gabrielle