The Buddhist version of hell is temporary and part of the reincarnation sequence: you are "reborn" there and get released after you "die" there.
Some Christians believe that nearly all sinners get a chance to work off their sins in Purgatory; only the very worst ( like Hitler) are stuck in Hell forever.
This isn't Hell. I'm not sure whether or not Michael knows that, but it isn't. It isn't bad enough, and there's too much emphasis on personal growth. If he does know it, well, he lied. Not exactly a first! He's been lying his head off from the beginning.
Anyway, so I think the next reveal, probably at the end of Season Two, will be that this is a very gentle kind of purgatory, for people who weren't completely terrible but didn't earn a heaven either. I also suspect that Janet may be God, or part of God, so I'll be keeping an eye on her. My guess, they can go to an actual Good Place, but they have to earn it here. In what is probably the actual Medium Place.
Wait a minute. If it was that the case, some kind of purgatory to prove themselves, they already did. Eleanor at least she improved herself vastlyn, not to mention unexpectedly.
I think the next season will focus on them figuring out again, but faster, and that will get Michael into big trouble. At that point Michael will have to somehow team up with the four of them and Janet so that he can save himself and will help save them in return. Michael is pulling all the strings, but my guess is that he will be cast out for failing again and become as condemned as the rest.