The only source that mentions Niflheim is Snorri’s Prose Edda. Niflheim means “World of Mist” which is somewhat confusing as it is mostly portrayed as a world of ice by contemporary authors and artists. The reason for this can be found in the Creation Myth where the waters flowing out from Niflheim start to turn into the ice that fills Ginnungagap, the great void between Niflheim and Muspelheim. What confuses things even further is Snorri’s comment that cold arises from Niflheim and that it is the home of the Hrimthurses, the Rime-Giants.
The reason for the mist lies at the center of Niflheim where we find the spring Hvergelmir. Hvergelmir is somewhat hard to translate but the seed-word is surely “hverr” which means cauldron or boiler. The translation of the second part is still debated and so different scholars have come to different conclusions about its exact meaning. There is a good chance that it simply means hot spring, at least this is the meaning of “hver” in modern Icelandic, a language, which is still very close to the original Old Norse. Snorri, the author of the Prose Edda, lived in Iceland where the climate is cold and the hot springs don’t just bubble away but actually shoot the boiling water 75 meters and more up in the air, which then turns into a cloud of mist…
Hvergelmir is the main source of water in the Norse Universe as mentioned in Grimnismal 26, where it is said that all rivers flow from it. It is the polar opposite of Muspelheim and the second substance needed in order for Ymir and Audhumla to come alive. It is the receptive medium which is “impregnated” by the sparks flying out of Muspelheim.
Its inhabitants are the Hrimthursar, the Rime-Giants. They are the oldest beings in the Universe, sons and daughters of the first being, Ymir. Since Odin and his brothers slew Ymir and through that act drowned most of the Rime-Giants, their relationship with the Gods is somewhat strained. At Ragnarök they will fight against them and finally get their revenge before the whole cycle starts all over again.