Ghost World refers to the location in which Sissel's spirit and various characters who have died can communicate throughout the game. It is also the location where recently deceased bodies can have their fate altered by Sissel, and acts as a gateway between the present and the time four minutes before death.
The Ghost World must be entered first before Sissel (and Missile and Yomiel) can move between cores, including those of corpses, in the cases of Sissel and Missile. It can be accessed at any time by pressing the "Ghost" icon at the bottom left of the touch screen.
When the Ghost World is entered time in the world of the living is stopped and only continues once the soul(s) leave the Ghost World. Leaving the Ghost World is necessary for Ghost Tricks involving the manipulation of an object or creature to be used due to the requirement for the passing of time. Missile's Ghost Trick (the ability to swap objects with the same shape) is the only one out of the three differing Tricks that can (and must) be used while in the Ghost World. The only other Ghost Trick that is used in the Ghost World is time traveling 4 minutes before a persons death.
As well as the absence of time there is also no darkness in the Ghost World (Sissel uses this fact to his advantage when helping Jowd escape from the special prison). As Ray put it, it is also impossible (or at least very difficult) to keep secrets in the Ghost World as all souls of the dead or people whose fate has been changed which are present in the same room can hear each other's thoughts.
The Ghost World has a different color for each ghost. Sissel's is red, Missile's is green, and Yomiel's is blue.