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Limbo is a dark and misty world, made solely of Unraveled Fabric blocks.
Dying in Dimensional Dungeons is a sure way of being sent to Limbo, in addition to overusing an Unstable Door. When you enter Limbo you will spawn at a height of 700 blocks and fall, however, you will not take any damage when you hit the ground because you can't take fall damage in Limbo. You will also keep your inventory if you die and go to Limbo.
There are only two ways to escape Limbo. The first is to find two columns of Unraveled Fabric in a "U" shape, which represent a gateway back into a random dimension.
The second is to go down deeper into Limbo, until you find a black void near some low points in the terrain (composed of Ancient fabric ). Touching these will teleport you back to the Overworld, but to an entirely random location; can be tens of thousands of blocks from the spawn. There is a third way, however it needs you to be in creative. Place a nether portal and enter and re-enter to be warped to the Overworld. You will still be warped far from where you were before you died.
It is also possible to build in Limbo. However, foreign blocks (such as torches) turn into Unraveled Fabric at random rates.