See Ez. 37:1-14 regarding the whole house of Israel being dried bones, but the breathe of life was brought into them and they did live. The house of Israel was not dead physically. They were dead spiritually.
See Luke 16:19-31 regarding Lazarus and the rich man. Was the rich man alive when he was talking to Abraham and asking him to send back Lazarus to tell his family the truth about heaven? The rich man existed and could talk, but was dead in spirit. Christ was giving us a snapshot of what it is like in the hereafter. So shall it be for the dead of Rev 20:5.
The dead of Rev. 20:5 are spiritually dead. They aren't laying in the ground somewhere waiting to be judged. They simply don't have Christ and have not been given eternal life. They need to go through the Millenium and be judged before they can receive eternal life. They are judged according to their works. Not works of the flesh, but works in the Millenium. They exist, but are dead just as the rich man.