Once you get the final melody, Ness experiences a flashback where he visits his own home and watches his family take care of him as a baby. When this flashback ends, Ness finds himself in the strange world of Magicant, which exists in his own mind.
You can meet Tracy and your Mom in the area just east of where you start. Tracy will do Escargo Express, and Mom will let you rest.
As you'll see, the color scheme of Magicant changes whenever you talk to anyone.
Get an Earth Pendant at the store, and some Magic Puddings for their PP healing power.
Head through to the area with the hotel, and be sure to get the PSI Caramel that is to the west of the hotel building.
North of this area is the home of the Flying Men. These are manifestations of Ness's courage. Talk to one, and he will join you as an ally. You can't control what Flying Man does, but he'll automatically help with the fighting. If the Flying Man dies, his grave will appear in front of the Flying Man house, and you can talk to another Flying Man to get another one to follow you, unless they all die.
When you reach the red area, you will have to fight monsters. Be sure not to level up to much, because if you're at level 99 before leaving Magicant, you'll miss out on a level up similar to what Poo achieved after his Mu training.
You will want to get all of the items from Magicant, because you won't be able to come back after you leave. Go to the right from the start of the red area to get a Bag of Dragonite. You can get a Baseball Cap from yourself here, but it's a really weak item, for nostalgia only. Go back to where the path splits, and go north. Go straight up until you reach the Goddess Band. Then go back to where the path splits, and go right.
The path is completely straightforward now. Get the Magicant Bat along the way, and then the Magic Tart. You will find a metallic tentacle. Check on it to be transported to the Sea of Eden.
The Sea of Eden is pretty straightforward. There are no gift boxes here. There are Krakens swimming around (which don't have the Gutsy Bat). When you can, head northwest. You'll find Ness's Nightmare sitting on a platform. Before talking to it, equip something that protects against Flash; ideally, the Night Pendant, Sea Pendant, or Star Pendant. If you don't have those, use the Earth Pendant that you bought here in Magicant. Find out how to defeat Ness's Nightmare.
Once Ness's Nightmare is destroyed, you have destroyed the evil in Ness's heart, and have full access to the power of the Earth's Your Sanctuary locations. Ness's own voice will tell him to go to Saturn Valley, and then Ness will get a bunch of Exp and will realize new PSI abilities.