The passage is referring to this age. There are few who find it during our earthly existence. The elect are saved in this lifetime by grace. The non-elect are baptized and purified in the Lake of Fire where they suffer the penalty for their sins - death of the old self. This is the second death. As the old self or sinful nature dies the new self is being created. The fires of hell not only punish but purify as well.
When Christ was punished at the cross the elect were crucified with Him. Our old self was crucified and put to death. For we have been crucified with Christ. For we are in a mystical union with Christ where we are in Him and He is in us. We are one with Him. Death to the old self. The non-elect are baptized and purified in the Lake of Fire where they suffer the penalty for their sins - death of the old self. This is the second death. It’s the death of the old self or sinful nature that is being referred to. As the old self dies the new self is being created. The fires of hell not only punish but purify as well.