The Fade is a metaphysical realm that is part of Thedas yet separated by the Veil. The Fade is split up into fiefs belonging to the spirits that live there, and they change the landscape of the Fade to emulate what they see in the minds of mortal dreamers. According to the Chantry, the Fade is the first realm created by the Maker, which he populated with the spirits, the first of his creations.
Every living being, with the exception of dwarves, enters the Fade mentally when they dream and mages tap into it when they cast spells. Most people do not remember their time in the Fade, mages however, are forced to recall. Killing a mortal dreaming in the Fade is a shock to their living bodies, but not lethal. The person merely wakes up. Mortals have entered the Fade physically only once, which caused the First Blight. Mages of the Circle frequently visit the Fade with the aid of lyrium and during their Harrowing, a mage is projected into the Fade to resist the attack of a demon.
There is one constant feature in the Fade, the Black City (which was once the Golden City until the Tevinter Magisters supposedly set foot within it). No one has yet found a way to reach it, though if one looks to the sky, they can see the Black City, forever in the distance.
The Chantry also holds that when a person dies, their spirit passes through the Fade to the afterlife. Those who have turned away from the Maker are doomed to wander the Fade forever as lost souls.