From Anstey’s Doctrinal Definitions:
This term is not found in Scripture, but the truth which it conveys certainly is. It refers to the condition of a person after death, but before resurrection. The intermediate state is sometimes referred to as the “separate” state, because in death the three parts that make up a human being (spirit, soul, and body) are separated (James 2:26). The spirit and soul would be conscious in Hades—the world of unseen, disembodied persons—and the body would be in the grave.
If a person dies in faith, being a believer, he would be “unclothed” in the intermediate state (2 Cor. 5:4). His spirit and soul would be "with Christ" in “paradise” (Phil. 1:23; Luke 24:51; Acts 1:9-10; 3:21; 7:55) while his body would be in the grave awaiting resurrection. His spirit and soul will be in a state that is “very much better” than anything that he would have experienced when he was alive in the body on earth (Phil. 1:23).
The souls and spirits of those who have died without faith are also in the intermediate state in Hades, but they are in an entirely different state than the righteous. Being lost, they presently “cry” out in “torments” (Luke 16:23; Job 14:22; 30:24) and await resurrection when they will have their eternal judgment sentenced to them at the Great White Throne Judgment, and then to be cast into Hell, “the lake of fire” (Rev. 20:11-15). (See Hell.)
The intermediate state is, therefore, a temporary condition of the dead. All who have died are in this separate state—both the righteous and the unrighteous. But they will not remain there forever. They will all be resurrected, but at different times, and thus will have vastly different destinies. (See Hades and Resurrection.)