Illustration from Perfect Memento in Strict Sense.
The other side of the Sanzu River.
Higan (彼岸) is on the other side of the Sanzu River. This place is a Pure Land with no weather, no seasons, and no night and day, it's just an endless flower garden with a gentle warmth. It is strictly not part of Gensokyo.
Souls of the deceased will wait at the Shigan (此岸) (the shore of the living world) of the Sanzu River for a Shinigami to ferry them one at a time. As one gets to the Higan side, there is nothing to do but silently wait and contemplate death until the Yama is ready to make the judgement. The yama, who can see the souls' past, will judge whether they should go to the Netherworld, Heaven, Hell, or be reincarnated. If it's Hell, then the soul will fall outside the cycle of reincarnation temporarily.
The word "Higan" is composed of the kanji for that or over there (彼) and shore (岸), so its literal meaning is "that shore" or "the shore on the other side". The Shigan (此岸), which is located on the opposite end to the Higan, can literally mean this shore or the shore on this side as well. Both of these term originate in Japanese Buddhism.
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