In the MK fictional universe.
The Netherealm, some people call it Hell. It is a vile place of evil, where only dark creatures inhabit it.
At first, under the rule of Lucifer, it was nothing but a wastland roamed by mindless fiends and zombies. However, after Raiden, the lord of thunder, defeated the corrupt Elder, Shinnok, the other Elders banished him to this realm. He would face and defeat Lucifer and proclaim himself ruler of the realm. He used his powers to turn the majority of the demons to a more decent form but retained their evil cores. He would also build a city that only the "decent" fiends are allowed to inhabit and the other zombies and oni are left scattered throughout the wastelands and the walls of the city ban the feroucious ones from entering the city.
At the center of the city exists a portal that only a few can use it to be transported to the Nexus.
Only the corrupt and tainted can exist in this realm, the decent ones with pure cores and exist in the realm. If a corrupt had his core cleansed, he would be automatically rejected and banished from the realm, and would usually wind up in Earth or Edenia. Ashrah was once a fiend of this realm, but using her enchanted blade to slay the monsters in this realm, she started to have a more human form, and she hopes of slaying the darkest monster in the Netherealm so she could be banished from this realm.
The Netherealm is hated and feared by everyone, including those with the darkest of cores like Quan Chi, the oni Draahmin and Molock fear this realm and seek to escape it. When a warrior with an extremly dark and corrupted core dies,they are transported to the Netherealm and their mind and body twists and become an inhabitant of this realm. Such was the case of the original Sub-Zero and Scorpion, were both killed and sent there, Sub-Zero would become Noob Saibot, a member of the Brotherhood of Shadow, and Scorpion became a powerful ninja spectre. They are the only ones that call this place home because there, their powers increase the longer they stay there and the deeper they venture into the wastelands.
Native realm species
In a generic sense, many demons and spectres are native to the Netherrealm in that human beings can be transformed into them when their essences descend into hell, but it is unclear if Netherrealm hosts any original life. It should also be noted that the inhabitants of this realm look more human than they are, because the realm's magical nature conceals their demonic nature. Once they leave the Netherrealm, they may start to decompose and rot. Like Chaosrealm inhabitants, some Netherrealmers tend to speak backwards.
A specific subset of demons, the Oni, is thought to be native to the Netherrealm. They vary a lot in terms of appearance, stature and color, as is evidenced by Drahmin and Moloch, and appear to be unable to communicate with other lifeforms. (Although in Armageddon's conquest mode Drahmin does state "Welcome to Hell." to Taven.) Their prime state of being appears to be one of unquenchable rage.
There are also seen dismembered humans, presumably from the Chamber of Dismembering.