There’s a lot of confusion about Hades, but it simply refers to the realm of the dead (or place of the dead). The Old Testament equivalent is called Sheol. This is where the dead went before the time of Jesus, or more specifically, before Jesus completed the atonement.
The story of The Rich Man and Lazarus describes Hades:
“There was a certain rich man who was clothed in purple and fine linen and fared sumptuously every day. But there was a certain beggar named Lazarus, full of sores, who was laid at his gate, desiring to be fed with the crumbs which fell from the rich man’s table. Moreover the dogs came and licked his sores. So it was that the beggar died, and was carried by the angels to Abraham’s bosom. The rich man also died and was buried. And being in torments in Hades, he lifted up his eyes and saw Abraham afar off, and Lazarus in his bosom. Then he cried and said, ‘Father Abraham, have mercy on me, and send Lazarus that he may dip the tip of his finger in water and cool my tongue; for I am tormented in this flame.’ But Abraham said, ‘Son, remember that in your lifetime you received your good things, and likewise Lazarus evil things; but now he is comforted and you are tormented. And besides all this, between us and you there is a great gulf fixed, so that those who want to pass from here to you cannot, nor can those from there pass to us’” (Luke 16:19–26).
Before the time of Jesus, both the righteous and the wicked went to Hades to await their final rewards or punishment. The reason why even the righteous had to go to Hades—instead of heaven (God’s presence)—is that their sins had not yet been atoned for. Jesus had not yet come and completed the atonement, and the blood of bulls and goats—animal sacrifices—could not take away sin (Heb. 10:4). Therefore, the Old Testament saints had to await their Savior in Hades.
Think about it logically. Since God is holy, therefore, sin cannot enter his presence (Ps. 5:4; Hab. 1:13; Rev. 21:27; 1 Cor. 6:9–10). Yet all have sinned—even the righteous saints (Rom. 3:23). Therefore, prior to Jesus’s atonement, nobody could enter God’s presence (heaven). So they had to await their Savior in Hades. This is why Daniel, a righteous man (Ezek. 14:14), was told by the angel: “Go your way till the end; for you shall rest [die], and will arise [out of Hades] to your inheritance at the end of the days [when the Christ makes atonement for your sins]” (Dan. 12:9).
When Jesus completed the atonement—by sacrificing himself on the cross and appearing a second time for salvation (Heb. 9:26–28)—the “many” righteous Old Testament saints such as Daniel arose from Hades to everlasting life, and the wicked went into everlasting contempt. Paul described it like this: “Death is swallowed up in victory. O Death, where is your sting? O Hades, where is your victory? The sting of death is sin, and the strength of sin is the law. But thanks be to God, who gives us the victory [over sin, the law, and Hades] through our Lord Jesus Christ” (1 Cor. 15:54–56). Jesus’s atonement gave the saints victory over Hades!
Since the atonement is now complete, Hades is no longer needed. Today, when a faithful child of God dies, he goes straight to heaven to be with the Lord (Matt. 5:11–12, 6:19–20). As the angel of Revelation said, “Blessed are the dead who die in the Lord from now on” (Rev. 14:13). This is likely the very same angel who had told Daniel, “Go your way till the end; for you shall rest [die], and will arise [out of Hades] to your inheritance at the end of the days [when the Christ makes atonement for your sins]” (Dan. 12:9). Today, since Christ has completed the atonement, the righteous dead go directly to the Lord/heaven. And the wicked perish (John 3:16).
Since there is no longer any need for Hades, it was destroyed: “Death and Hades were cast into the Lake of Fire” (Rev. 20:14). Notice that the passage says death, too, was destroyed/cast into the lake of fire. Paul said the very same thing, albeit without the apocalyptic language: “[Jesus] abolished death and brought life and immortality [for believers]” (2 Tim. 1:10). Elsewhere, Paul said, “Death is swallowed up in victory…through Jesus Christ” (1 Cor. 15:54–55). Death has been destroyed! This is what the general resurrection was all about. Jesus has overcome (spiritual) death.
As Jesus said, “Whoever lives and believes in Me shall never die” (John 11:26). Therefore, Christians do not have to weep at funerals like unbelievers without hope (1 Thess. 4:13).