Duel Monster Spirits, Duel Spirits, or what are now known as Duel Monsters is the name given to the creatures whose remnants inspired Maximillion Pegasus to create the popular card game of the same name. They live primarily in the Duel Monster Spirit World.
These spirits seem to form a bond with a human that shares characteristics with them (a characteristic similar to "demons", which are said to be mythical creature representing your soul in classical mythology). The spirits become a person's Ba (In Egyptian mythology, the Ba was the other half of your soul. Your personality). Some people can possess multiple spirits as their Ba. A person's Ba can fuse with their Ka (life energy) to fuse the person with their spirit, such as when Mahad became Dark Magician. The Ba of each Signer is their Signer Dragon. When a person dies, they can either pass on into the afterlife, or fuse with your Ba to become a Duel Monster Spirit like Mana did. It is highly implied that the afterlife and the Duel Monsters Spirit World are both connected somehow.
Through Duel Monsters and magical forces, a person can summon multiple spirits. However, that person is still strongly bonded to their Ba and performs best with it.
These spirits have their own societies in each section of the spirit world (sections which are later explained by Yubel to be entirely different dimensions), however the majority appear to be allies of each other and the human world, although there have been conflicts between the spirits of some dimensions, such as between DARK Fiend-Type monsters against LIGHT Fairy-Type monsters or Warrior-Type monsters against Dragon-Type monsters, among others. The Duel Spirits of some sections are allies of the human world as many ancient societies such as Atlantis, Egypt and the People of the Stars. The Earth has been both aided and plagued by both good and evil spirits.
One section of the spirit world appears to be based of mostly Fairy and Dragon type monsters although Dark Magician Girl appeared to be the leader of them. Her presence in this place may indicate other Spellcaster type monsters such as Dark Magician also live there. The most notable Duel Spirits from this area are the Legendary Knights of Atlantis, Timaeus, Critias, and Hermos who are it's guardians. According to Dark Magician Girl, the spirit world has existed as long as mankind has existed.
Another section is Neo-Space, which is the realm beyond Earth in outer space in which consists of many Alien duel spirits such as Elemental Hero Neos and the Neo-Spacians. They believe in a being with the power to bridge the worlds of the Duel Spirits and the humans called the Supreme King, whose destined to save both worlds from The Light of Destruction.
Duel Spirits have played a pivotal role in human history dating back at least ten thousand years. Humans somehow found a way to summon them here the human world using magic and spells. The Ancient Egyptians sealed their spirits (or the means to summon them) in stone tablets by ripping a person's Ba from them, killing them in the process. These tablets resembled duel monsters cards and later inspired Maximillion Pegasus to create the game. In doing so, Pegasus sealed the duel spirits (or means to summon them) in the cards, similar to how they were sealed in the tablets. However, they are only truly summoned when magic forces are involved or when they are involved with certain individuals. Otherwise, they are merely represented by holograms projected by KaibaCorp technology. Therefore while they have true physical form in their own world, they cannot take physical form on Earth without being summoned here. Duel Monster Spirit Day is an exception however being the only day of the year when Duel Spirits can take physical form on Earth without elements of magic being involved.
Back in the times of Atlantis, the spirits came to the aid of Ironheart, Chris and the survivors of Atlantis after its king, Dartz, corrupted and brainwashed by the Orichalcos, began a conquest to destroy all life on Earth to recreate it. They sent a huge army against Dartz's Orichalcos soldiers and the Great Leviathan in the Battle of Atlantis. Neither side was victorious, Atlantis sank into the ocean depths and the Duel Spirits were sealed away until they be needed again.
Around that time the Crimson Dragon and its servants the Signer Dragons battled the evil entity called Red Nova to exhaustion. It was only through the help of a Legendary Signer that Red Nova would be defeated and sealed away into the Earth and become the first of the Nazca lines, thus becoming the first Earthbound Immortal.
Regardless of their nature, Duel Monster Spirits seem to possess different powers depending on who the monster is. For example Jinzo and Yubel have the ability to possess people and take on a physical form if they have enough energy. Winged Kuriboh could take Jaden Yuki to another dimension. Brron was capable of performing a ritual using negative feelings to create Super Polymerization, to name a few.
A common trend however is that seemingly all Duel Spirits can Duel themselves and have their own Deck, which in most of not all cases will have at least one copy of the card they themselves represent, regardless of rarity. For example in Yu-Gi-Oh! GX the spirit of Dark Magician Girl had her own card of Dark Magician Girl even though Bastion Misawa claimed Yugi Muto was the only known owner of the card.