There is no concensus on Earwan metaphysics relating to the soul. That doesn't mean we can't have a formal understanding, because the series quite deliberately illustrates observable effects and we have many clarifications direct from Scott.
My take on the metaphysics, as they pertains to souls, and the 'Confluence'.
confluence
ˈkɒnflʊəns
noun
the junction of two rivers, especially rivers of approximately equal width
Meaning has a physical effect in the Earwa - although is serves to transcend mundane physics. The Outside is separated from the World by it's non-physical nature, not it's location. the point where the Outside overlaps the world is along the boundaries of physical stuff, like Cnaiur's skin or the surface of the ground. The ability to see the 'half-real' is what the few possess. Only those that can see the Onta can see the Mark - because the Mark reveals where meanings have been tampered with from 'inside' the World - it looks different.
So, the bifurcate folds of the brain are a natural place to find where to soul 'intersects' with the body across the boundaries. It's why the light from sorcery comes from inside the skull. Handily, this means you just need swap heads in order to transport the soul. Think of the Larvals, the Inchoroi Grafting new bodies and creating synthese (without the Confluence) as well as the Decapitants. It all adds up.
When it comes to the question of souls and Damnation, one should first ask where all meaning comes from? Souls are born ignorant (ideally) but when they die and return to the Outside they have subjectively experienced and created an entire life of meaning. Some of it remains in the World, bleeding into the boundaries and creating an aggregate to the boundary layers of reality (i.e. history)- sometimes creating haunted places and even Topoi like Mengedda.
The problem for souls is that suffering is the most multitudinous and potent type of meaning that they generate, propagate and share through the Daimos. Everybody suffers and everybody creates suffering for others. Even the redeemed, like Esme, have got a bunch of suffering and sin that comprises their identity.
So ... prior to gaining entry to one of the hundred Heavens, such a soul must be shriven. Where then does their suffering go? Into the pit - Ciphrang are keen for any experience and it seems like the weakest 'demon-level agencies' subsist on the most abundant type of meaning - suffering. Thus, 100 hells for every Heaven, and part of everyone is Damned and goes into Hell. Seems like it's just about where the majority of your ego ends up.
However, there are several examples of people who are already Ciphrang before the die. Kosoter, Serwa and C'nauir are all revealed to be Ciphrang by the Judging Eye (althought C'naiur is somewhat more). So these are souls whose ego will make the jump to becoming an Agency within the Outside - a Hunger rather than Fodder (if we can depend on Kellhus' revelations at the Inverse Fire).