From the Super Mario Wiki
The Dimension is accessed via paranormal portals, which can be found hidden in fake doors or various objects. Ghosts can freely transfer between the dimension and the Mushroom Kingdom by creating portals; larger portals can be created by more powerful Ghosts. The Dimension served as the setting for the levels in the Bonus Challenges, Luigi's battle with the Tough Possessor, and the final battle with King Boo.
The Paranormal Dimension is a home for many of the Ghosts seen in the game.