Capital of the Dead

is a crystallized dimension parallel to the world of the living, where the souls of the deceased reside.

Background
The rumor about the area has led travelers and rich people to settle, and subsequently establishing Tala Village at the entrance of the Capital of the Dead. A living individual cannot enter the place even if they just desire to. However, a common saying, "A priceless memory shared with the deceased will open the path to the capital," implies that a person who shares a precious memory with a deceased person can enter the place without dying.

Capital of the Dead arc
The Boar Hat gang decided to travel to the Capital of the Dead to find King who went there to find his deceased sister Elaine. They end up traveling there with Ban and King's memories of Elaine. Ban immediately notices a girl and rushes in her chase, with King, in turn, following Ban.

While Ban was away chasing the girl, Meliodas and Diane face off a Holy Knight named Guila who killed herself to be there and notice how dangerous she was, Meliodas told Elizabeth to escape with Hawk while the two fight. In response, Meliodas draws Dragon Handle and utilizes Full Counter against Guila, who reveals that she knows the ability and has created tactics to counter it.

As Ban was chasing the girl and King was following him, the two end up having another fight. King narrates how he came to discover his home to have been burned to the ground, then trapping Ban by transforming his pillow into a giant stuffed bear, and angrily reveals that the Guardian Saint whom Ban killed was his sister. When Ban, in response, declares that he is immortal, King uses his sacred treasure to petrify the immortal, as he'll never die and be stuck in that state as eternal punishment.

When Ban turns completely into a statue and King leaving him behind, he suddenly notices spheres of light approaching Ban, and as he recognizes the spheres to be Elaine, she kisses Ban in order to break King's curse. They exchange their greetings, when King confusingly yells at them, questioning whether Elaine was still angry at him for leaving her and his kingdom.

The three are distracted by a huge explosion some distance away. Noticing that a Holy Knight has arrived, Ban proceeds to head there, but only before telling Elaine that he will definitely make her his someday. Ban end up joining the fight but even with Ban on the team, they were getting badly hurt.

King continues questioning Elaine why she forgave Ban and not him, but Elaine explained to him why she couldn't forgive King so easily. Before King says anything else Elizabeth and Hawk comes running by whilst trying to escape from Guila.

King asks who they are, so Elizabeth and Hawk introduces themselves and that they are currently traveling with Meliodas. Elizabeth tells him what is happening in the battle field who in response, ask him to help her, but when he refuse, King was surprised by Elizabeth bravely tells him to run away instead and tries to borrow his spear to fight against Guila. Feeling inspired by Elizabeth's bravery, King activates levitates and heads to the battle.

As the battle continues, the Sins were losing but then King arrived and offers to help them and fight Guila alone. After King defeated Guila with ease. Elaine revealed that King was the Fair King of they home Kingdom. King then turns away from the defeated Guila, but Guila gets out of the rubble and attacks King. King then saved by Meliodas and notices that Guila's presence has left.

Afterwards King along with the rest are rejected by the capital, which Elaine thanks him for protecting Ban before they leave.

Defensive Battle for Liones arc
After bringing Zaratras to Meliodas' body, the former Great Holy Knight asks Elizabeth if she went to the Necropolis to see Meliodas and she confirms this, having went with Hawk some point after Meliodas' death to see him one last time but didn't find him there, not knowing he was in Purgatory waiting for his resurrection.

Trivia

 * The Capital of the Dead does not hold the souls of those who are reincarnated, nor of those who are stuck in Purgatory or if their souls are eaten:
 * Liz did not appear when Meliodas entered because she was reincarnated into Elizabeth, as with all of Elizabeth's previous incarnations before.
 * Meliodas did not appear before Elizabeth because his soul was stuck in limbo in Purgatory, waiting for his resurrection.
 * Zhivago didn't appear when Ban entered it again at some point because his soul was eaten by Galand
 * Matrona was not shown when Diane visited the Capital of the Dead because she was alive the whole time, but also due to the fact that it may not have worked regardless due to Diane's mixed feelings.
 * It is revealed that the souls in the Capital of the Dead can observe their friends and loved ones in the world of the living through the crystals as first shown with Elaine watching Ban and Jericho in their travel, yet she didn't know about Ban's scar from Meliodas for some reason.
 * The English dub and English subtitles both refer to it as "the Necropolis" (which is derived from Greek words meaning "City of the Dead").
 * In Abrahamic mythology it is said that there are three or four destinies of life after death, namely, Heaven (for good souls) Hell (for sin souls), Limbo (the borderlands of Hell) and purgatory (the borderlands of life and death).
 * However it seems that the capital of the dead is a free representation of Heaven or paradise