Let's compare life to running a race. If we do our best and obey the rules we can win. In the race of life it doesn't matter so much what place you come in just as long as you are working your very hardest. Heavenly Father has given us commandments, or "rules", as to how we can succeed. We are given this time on earth to learn to follow those commandments and have faith in Jesus Christ. When we reach the finish line, or once we die, we will not, however receive the same prize.
When I finish a race (I never come in first by the way) I usually walk over to the shade of a tree and find something to drink. Personally, I love a nice, cold chocolate milk after a hard race. This is not, however, my final prize or trophy. I would compare this state of waiting to what we call Spirt Paradise. I am waiting for the final judgement of my performance which comes later. Those people in the race that break the rules or don't give it their all won't be so privilged as to drink a nice cold beverage or relax in the shade. We call this Spirit Prison.
I know this isn't a perfect parallel but hey, I do my best. Alma explains it much better than me. He says, "...that the spirits of those who are righteous are received into a state of happiness, which is called paradise, a state of rest, a state of peace, where they shall rest from all their troubles...And... that the spirits of the wicked,... shall be cast out into outer darkness; there shall be weeping, and wailing, and gnashing of teeth, and this because of their own iniquity..."1
It's easy to see where we want to end up. May we all run the race as best we can!