There is actually no real metaphysical difference between the Upper and Lower Planes, the difference is only one of taxonomic convenience. The Upper Places are those bubbles where “good” people go, and the Lower where “bad” people go, exactly which bubble planes belong to which group is often a source of intense theological debate, occasionally to the point of holy war. The bubbles are formed primarily through the will of the Ancestor Spirits, who as a collective culture, construct the places that reflect their mythology. When a spirit passes through the 9th Gate of the Shadowfell, they will most likely seek out the “Heaven” of their Ancestors or God of their choice, who may or may not reject them based on whether or not they adhered to their view of a righteous life. If not, they are cast out, and if they cannot find refuge in any other of the other Many Heavens, may instead find themselves trapped in one of the many Lower Plane bubbles - often where the “evil” (by most moral standards) accumulate.
When people die, they go to Elysium, the Beastlands, Ysgard… there are many heavens that one can go if you have led a virtuous life, to join your ancestors in eternal revelry in the manner of their wont. Some engage in singing, others prefer raucous parties and the occasional fist fight, others prefer to laze about in beautiful meadows. If the descendants of a particular ancestor pay them enough reverence, they gain the power of a God, or perhaps a minor Saint - the Mortadei in common parlance. When spirits arrive here, they may remain ghosts, but others choose a kind of reincarnation, allowing themselves to become celestials, angelic beings capable of carrying out the will of their divine Ancestors.
If you haven’t been a good person when you had the chance, you go to one of the many lower planes where you experience an eternity of suffering at the hands of those who died before, ultimately joining their ranks as fiends, fighting for dominion amongst themselves, and over other Hells or Heavens. Particularly strong fiends may style themselves as Gods, and if they have the worship of mortals, may indeed qualify as Ancestors - but most derive their strength by exerting control over legions of the dead unlucky or deserving enough to be rejected from the Heavens that they manage to catch and press into service.
There are many types of fiends, and the differences between them are often made for taxonomic purposes, rather than being ground in any actual real difference. For example, Devils belong to those Hells that appear as organsied armies, that may even form allegiances between themselves in order to overwhelm their prey. Demons on the other hand appear as disorganised chaotic swarms, driven forward by a mindless mad desire to dominate and kill. Loths are typically not outwardly violent, but often use malicious trickery and manipulation to play their enemies against each other in order to achieve supremacy.