Halls of Waiting

There's little direct evidence for the exact location of Mandos' Halls of Waiting, but it is known that they lay in the extreme west of Valinor, on the shores of the Outer Sea.

The Halls of the Vala Mandos, that lay in the northern and western part of Valinor, on the shores of the Encircling Sea. Also known as the Halls of Awaiting, the Timeless Halls and the Houses of the Dead, it was here that the spirits of the dead of Middle-earth were summoned and housed for a time. The Halls grew greater as time passed to house the fëar or spirits, and their walls were hung with the tapestries of Mandos' spouse, Vairë the Weaver, telling the tale of the history of the world.

Each of the races of Arda had a different fate when their spirits entered the Halls. For most Elves, the stay was a temporary one, and they would eventually be re-embodied and returned to life in Aman. This gift was withheld from some, and their spirits will remain within Mandos' Halls while the world lasts: Fëanor was one of these.

The spirits of Men are also gathered in the Halls, but from there they pass on across the Outer Sea to a mysterious realm beyond Arda, unknown even to most of the Valar. As for Dwarves, they were not part of Ilúvatar's original scheme for the world, and their fate is uncertain. Their own tradition was that their spirits, too, would be gathered by Mandos, and remain in the Halls of Waiting until the time when Arda will be remade, in which they will assist their own maker, Aulë the Smith. The truth of this is uncertain, but it was clearly Thorin's belief in his words quoted above.