The Rotten World is the world of the Undead. It seems to be the analog to the Hell described in Judeo-Christian beliefs, but appears to be based on Sheol, where the dead, good or evil, are sent to in the afterlife in contrast with Heaven and Hell.
Swan summoned the Five Generals to San Romero by the use of a spell. Before Juliet and Morikawa could send them back, a gateway between the two worlds was forged. Now she has to defeat them in order to close the gateway.
Killabilly is the god of this realm.