"Everybody here is just as dead as you! That's why we call it the Land of the Dead."-Manny to his client, Celso Flores
The Eighth Underworld (usually referred to as The Land of the Dead) is the realm which people who have died inhabit, after being reaped and brought to it by agents of the Department of Death.
Inhabited by dead people, dead animals and demons, the Land of the Dead is the world which most of Grim Fandango takes place (the only exceptions being Manny's two in-game visits to the Land of the Living). It acts as a purgatory for souls that have either not lived "good" lives or that were not "good enough" in their lives.
In order to make up for their past and be able to enter the Ninth Underworld, the dead must travel to its entrance on the other side of the world, a perilous journey that takes four years (e.g. by boat to cross the Sea of Lament or through the Petrified Forest with the Fire Beavers) on their way to the gate . How wealthy a person was when alive could diminish the four-year journey, depending on which travel package they were sold to by agents of the Department of Death. However, should one have had a "good" life, a Number Nine train ticket would be given to them as a reward which does the journey in four minutes and its tracks avoid all kinds of dangers and problems a soul could encounter. Nevertheless, of all packages shown in the game, none of them significantly diminish one's stay in the Eighth Underworld as much as the rightful ownership of a Double-N Ticket does.
As implied by Chowchilla Charlie, the Land of the Dead has no sovereign government, but cities apparently govern themselves independently. During a conversation in Year 2, Manny tells Membrillo that he too worked for the government, as a reaper in the DOD. Considering the role of the Department of Death (bring people from the Land of the Living to the Land of the Dead), it could be only a government company, rather than the government of El Marrow itself. In Year 1, there are no mentions as to how or by whom El Marrow is politically governed. Although Hector LeMans is shown to control the city in Year 4, he is, in fact, a very powerful gangster rather than the mayor of the city (if there is one). Rubacava's government is slightly mentioned in Year 2, by the revolutionary trio at the Blue Casket, when apparently discussing how to solve the city's issues. Of all people residing in the city, only three appear to be government employees: Police Chief Bogen, Security Officer Carla and Membrillo. At any rate, similarly to the situation in the previous city, who the politician(s) that control the city are, is never said, even though the most powerful individual and organisation (by Year 2) are, respectively, Maximino and the Maritime Union.
Briefly mentioned in both Years 2 and 3, Puerto Zapato is another city. The presence of a Customs Agency in the city strongly implies in the existence of a government in such. However, considering the brief nature of the conversations about Puerto Zapato and the fact that Manny does not interact with anyone there aside from the sprouted crew of the SS Lola, a terrified Glottis and disguised assassins, no further information is provided.