Where do the unsaved remain during the thousand-year Kingdom rule?
The unsaved remain in their original state, which is hell as commonly understood, throughout the thousand-year Kingdom rule. They are the rest of the dead who are not resurrected with believers; nothing happens to them until the thousand years are finished.
Les explains in this passage that after all believers—from Abel through the tribulation—are resurrected and in the Lord's presence, "the rest of the dead" must be the lost. Because the saved are already resurrected, the lost have nothing happen to them until the thousand years are finished. They stay in their original state, which is hell as we understand it, all during the thousand years of the Kingdom rule. The "this" at the end of verse 5 refers to the people in verse 4, the first resurrection.
But the rest of the dead lived not again until the thousand years were finished. This is the first resurrection.
More Questions
Where are the lost during the thousand-year reign of Christ?
The lost remain in their original state in hell throughout the thousand-year Kingdom rule.