READ BEFORE PROCEEDING : There is a very real possibility that 90% of what I'm about to say is conjecture. So, death. After reading The End of the Maiden's Illusion (
http://danbooru.donmai.us/pools/778),
[SPOILERS AHEAD] I started thinking about death in Gensokyo. In The End of the Maiden's Illusion, Reimu dies and decides to get reincarnated. On the ferry ride across the Sanzu River, Komachi tries to convince her to ascend to become a celestial so she won't be gone forever. So, I deduced that there's 4 options after you die. (assuming the person has a choice in the matter)
Option A: Ascend and become a Celestial
Option B: Get reincarnated
Option C: Go to the Netherworld
Option D: Hell
Now, I understand you're probably thinking "Who would ever
choose to go to Hell?" I'm not saying going to Hell is a choice, but a possibility. And, becoming a Celestial has a few different criteria, so it's also out of the hands of the dead person. Let's look at each option individually.
Ascending to CelestialBecoming a Celestial means you'd have to achieve Nirvana through reincarnation, or be judged worthy by the Yama to be able to ascend. Tenshi is the only celestial that comes to mind at the moment, so I'll use her as an example. Tenshi seems to be able to come and go from the living plain of Gensokyo as she pleases,
despite being dead. I'll come back to this point later.
ReincarnationReincarnation means you get reborn as another living thing.Only problem is, the original "you" is lost to allow you to become whatever you get reborn as, whether it be a water spider, a mosquito, etc. (if I'm wrong feel free to correct me on any of this as I'm not the most familiar with the subject)
NetherworldThe Netherworld being "the land where ghosts and spirits reside after death", (From the "Netherworld" page of the Touhou Wiki) the spirits of those who have passed on, live on in the Netherworld. The most obvious example of someone who died and now lives in the Netherworld is Yuyuko Saigyouji. As we all (should) know, Yuyuko nearly stole springtime from Gensokyo during the events of Perfect Cherry Blossom. She can interact with the living world, despite A being dead, and B the gate/barrier between Gensokyo and the Netherworld. Yuyuko can interact with the people in the living world as well.
So, remember what I said about Tenshi
despite her being dead? I'll explain that now.
Being a Celestial or living in the Netherworld seems to mean you can come and go from Gensokyo at your leisure, and interact with the people there. So, if you die, and fall into the category of either Celestial or Netherworld Resident, you're never
truly dead, are you? If you can return to where you once lived and talk to your friends and family, albeit as a ghost or Celestial, you're not really
gone. The only way you're truly gone is to be reincarnated or get sent to Hell by the Yama.
Anyway, feel free to add your own input and tell me what I got wrong.
TL;DR Version: People die but don't really die
UPDATE: Crossed out incorrect info