For those not "in the know" here is what this image represents.
In this image we see a broader glimpse of our existence. First, we lived with our Father in Heaven. We were all there, his spirit children. We wanted to be like him. He wanted that too. He presented a plan to help us achieve this desire.
We would be given mortal bodies. We would be given agency. We would be tried and tested. We would suffer but we would also learn and grow.
Part of this plan was the "fall". This is when Adam and Eve partook of the tree of Knowledge of Good and Evil and were cast out of the Garden of Eden. If this had not happened none of us could be born. But in this fallen state we would not be able to return to our Father.
To redeem us from our fallen state, there would be a Savior, Jesus Christ. He would atone for us and make it possible to return. But not everyone would be saved. Through our choices, we might become separated from our Father forever.
To make a long story short, Lucifer offered a different plan, a plan of force with him taking the glory. There was a war and he and his followers were cast out of Heaven. They will never have bodies or progress. They are limited. But they are allowed to tempt us.
Lucifer became Satan and tempted Eve, hoping to destroy the plan. He failed, of course. Now we are here, mortal and struggling. But we are never alone. Help is always available if we have the faith to ask for it.
When we die, we move to the Spirit World. This is divided into Spirit Prison and Paradise. Here we await Resurrection and the Final Judgement. All those who had bodies will be resurrected and will never die. This is immortality.
When we are judged we will receive a "degree of glory". Those who have proven themselves most worthy will be in the Celestial Kingdom with our Heavenly Father. Here we will be able to live as families, continue to have children, learn, progress, etc. This is eternal life.
Satan and his followers will go to Outer Darkness.
(A few Biblical references: Rev. 12:7-17, Jer. 1:5, Acts 17:28-29, Jude 1:6, Gen 3:22, John 10:34, 2Cor 3:17-18, 1John 3:2, John 5:25, 1 Peter 3:18-20, 1Peter 4:6, Luke 23:43, Rev 14:13, 1 Cor 15:40-58, 2 Cor. 4:17 a few Modern-Day Revelations: D&C 88, D&C 138)
This is a very simplified crash-course for background reference. I realize it does not directly answer the original questions. But it is relevant. And it helps explain why I didn't like the anecdote that inspired my first post.
I will post the follow-up to this also.