In this universe, there exist special places that are bounded by walls that you cannot transgress, meaning you cannot enter those places by physically travelling there.
Filled with Energy of Death, an eerie form of mana, the Netherrealm stores people who have died but didn't pass on.
It's altogether different from the situation of the white dimension in a way that what manifests in the white dimension is not a real man or woman but their deep strong desires that were left unfulfilled.
Think of it as a place where all kinds of negativity lingers and combining together, it forms a mindless creature that crawls there.
That was the foundation of that place before it started evolving with the system, too. Those creatures I mean.
With evolution, some of those negative desires ended up gaining back their original memories, or perhaps a fraction of it, which increased their innate desire to come back to this planet or perhaps to where they belonged.