The Graveyard is an overworld zone in The Swords of Ditto, usually located adjacent to the Town.
If your last century ended with you falling, then your sword is found in the graveyard as opposed to near a statue in town. There is also a church inhabited by Mormo's biggest fan who will sell you ether based stickers.
If you fail to defeat Mormo several times in a row, the graveyard will become much more lively with horrid festival decorations and even a statue of Mormo.