It’s primarily a state of mind, or rather a state of consciousness, and in the heavenly sense, of transcendent consciousness that is capable of expressing as mind, heart, and in other ways not definable in intellectual terms. So “state of mind” is a very inadequate, and possibility misleading description.
It is not in space, or rather limited in space the way material things are, but at the same time the concept of space does play a part. The soul or out-of-the-body consciousness can interact with the physical world as occasionally happens in visitations from those in the afterlife, and also those in the higher state sometimes show awareness of what is happening in ordinary space/time on the physical plane.
It is only “outside of self” in the sense that, in the more advanced phase of life in the subtle worlds beyond the physical, there is progressive freedom from the usual egotistic concerns that trouble those in the body. But at the same time it includes “self” in the sense of identify, self-awareness—the soul is creative and multi-dimensional and knows itself as expressing “heart,” “head,” and “will,” but these expressions of consciousness are also in evolution and their meaning is for more than what the terms suggest to most persons.
And finally, the word “resides” is also partly misleading because it may suggest a static state where as soul consciousness and soul life are dynamic and always unfolding more of their infinite potential.