Arthur: Unconstructed dream space.
Ariadne: Well, what the hell is down there?
Arthur: Just raw, infinite subconscious. Nothing is down there. Except for whatever that might have been left behind by whoever's sharing the dream who was trapped down there before.
Limbo, as it is referred to in the dream realm, is an expanse of infinite raw subconscious.
Limbo exists as a shared space that is not dreamt by any one of the individuals dreaming together, but is a shared space where any one of the minds sharing the dream can make drastic alterations of any kind without limits or obstacles. Because of the apparent lack of limitations, limbo is a dimension that can allow a dreamer to manifest their deepest desires, but also unwittingly trap themselves in a world where they lose their awareness that the world created is not reality.
During Inception, limbo takes on the appearance of an endless ocean. Under the influence of Dom and Mal, an enormous and elaborate city was built, though it has been abandoned and is decaying since Cobb's last appearance to the city.
Traveling to Limbo
Limbo can be entered by traveling deeper through the dream levels. After Fischer dies in the Mountain Dream, Cobb and Ariadne are able to enter Limbo by sleeping. The only reason this is possible is because, as Yusuf establishes earlier, the team cannot create more than three stable levels of dreams. Therefore, sleeping in Level 3 results is a sleeper dreaming themselves into Limbo. It should also be noted that manually entering Limbo allows a sleeper to retain the knowledge that they are dreaming, making it easier to avoid becoming 'lost' in Limbo.
Dom and Mal's Experiments
At some unspecified point in time before the Fischer inception job began, Cobb and Mal were performing experiments to see how deep they could travel within their minds. Eventually they manually dreamt themselves into Limbo. Here they were able to create a perfect environment together and "feel like gods".
Eventually, the couple began to build from their memories, making the distinction between reality and dream more difficult to distinguish. Over time, Cobb became dissatisfied with Limbo because he knew that it was not real, while Mal was beginning to accept it as her reality, as she saw Limbo as a paradise. Mal would not accept that she was asleep, so Cobb was forced to perform Inception on her, planting the idea in her mind that her world was not real.
At this point Mal was filled with enough doubt to allow her and Cobb to kill themselves on train tracks in order to wake up. After waking, the idea Cobb planted in her mind was still growing and Mal still believed she was dreaming. Eventually, she committed suicide in an attempt to "wake up". The guilt of knowing that his Inception caused her to kill herself continues to haunt Cobb.
The time scale in limbo is stretched out to a much higher extent than in dreams since it is not a dream level, but a separate plane. Very few people have experimented and gone into limbo due to its risks. As a result of the extreme time dilation in the plane, people in limbo can experience years in a minimal amount of time. The resulting effect on the mental state can be difficult to overcome upon waking, as the years experienced in limbo can result in the dreamer believing that what they have experienced is actual reality.
It is implied that dying in Limbo will allow the dreamer awaken in reality again. However, because of the extreme time dilation in Limbo, the dreamer is unlikely to realize that the world the dreamer is experiencing is actually a dream. As a result, the dreamer will perceive the dream world is real and will not be able to wake from Limbo.
Cobb and Mal manage to leave Limbo by committing suicide, presumably straight into the waking world. Robert Fischer and Ariadne also manage to leave Limbo by falling from a high balcony, kicking them back to the third dream level of the Inception dream. During the Inception job, Saito is unable to immediately leave Limbo as a result of unconsciously falling into Limbo and experiences countless years in Limbo, perceiving it to be reality. When Cobb finally appears before him in Limbo, Saito and Cobb remember that they are dreaming and wake themselves up, leaving Limbo once and for all.