What happens to movies or TV shows characters after their moment on the silver screen is over? They return to the world of Fandomverse, where they are able to live a normal life, after having their moments in the movies. Characters don't die, even if they do on screen. They are simply returned to Fandomverse. It is a generally peaceful world, though some zones are continually at war, whether it is it is against zombies, other soldiers or against xenomorphs in space.
The characters are aware that there are others who are identical in appearance, and it is an accepted fact of life. They are not aware, however, that they are fiction, the product of a creative mind. They are aware of the other islands and may travel as they wish between them, meeting different people with different beliefs. Magic exists, but it is nearly impossible to perform in island where it doesn't normally occur. Technology is also very strictly controlled; it will disappear from the island it doesn't belong as soon as someone let go of it and reappear into it's rightful storage place.
Until recently, original characters were not allowed. Now, they are allowed, provided that they are based off some fandom. An Original X-men, for example or some random Asgardian. Details from the fandom must be included in the Original Character's history.