Wrongful Death City, as the name suggests, is the place where the souls of those who have died unjustly are imprisoned. There are many types of souls in this world, such as those who die in car accidents. Although they might harbor a strong resentment, they don't necessarily want to cultivate it or seek revenge.
So, they go to Wrongful Death City, where they exhaust their remaining yang life before they can finally enter the cycle of reincarnation.
When Er Zi left, she took her child with her. Once in Wrongful Death City, they can only leave after depleting their yang life, so there's only one possibility...
At the time, Er Zi didn't enter Wrongful Death City but found a place to hide, preparing to find Liu Zi'ang again when the opportunity arose, or to reunite with him and his family after his death.
With Liu Zi'ang's mother burning this paper...
It completely set Er Zi off.