G.K. Chesterton is here referring to Swedenborg's common (for him) and somewhat unusual (in general religious writing) expression "the hells."

In his voluminous theological writings, Emanuel Swedenborg (1688–1772) spoke both of "hell" in the singular and of "the hells" in the plural, depending upon the context and the point he was making. In fact, based on context and subject matter, there are three general answers to the question of how many hells Swedenborg said there were:

1. One hell
2. Three hells
3. Too many hells to count

This arrangement draws on the philosophical and esoteric concept of "macrocosm and microcosm," which is a fairly common theme in Swedenborg's theological writings.

1. One hell

As in general religious usage, Swedenborg commonly refers to "hell" in the singular. For example, his very first reference to hell in his published theological writings occurs early in his first published theological work:

I have been taught about the different kinds of spirits, the situation of souls after death, hell, (or the regrettable state of the faithless), and heaven (or the blissful state of the faithful). (Secrets of Heaven #5, italics added)

In the opening paragraph of his treatment of hell in his book Heaven and Hell he uses both the singular and the plural in referring to heaven and to hell:

In the earlier discussion of heaven, it was made clear throughout (particularly in #2–6) that the Lord is the God of heaven and that the whole government of the heavens is in the Lord's hands. Since the relationship of heaven to hell and of hell to heaven is like that of two opposites that act against each other, with the action and reaction yielding the state of equilibrium within which everything exists, in order for absolutely everything to be kept in this balance, it is necessary that the ruler of the one be the ruler of the other as well. That is, unless the same Lord controlled the attacks of the hells and restrained their madness, the balance would be destroyed; and if the balance were destroyed, everything else would go. (Heaven and Hell #536, italics added)

In Swedenborg's usage "hell" in the singular refers to the entirety of hell, including all of its regions and parts—which are also individually referred to as "hells."

2. Three hells

In line with Paul's reference to "the third heaven" in 2 Corinthians 12:2, Swedenborg stated that there are three heavens, forming three levels one above the other, or three rings of a concentric circle:

There are three heavens, very clearly distinguished from each other. There is a central or third heaven, an intermediate or second one, and an outmost or first. These follow in sequence and are interdependent, like the highest part of the human body, the head; the middle, or torso; and the lowest, or feet; or like the highest, middle, and lowest parts of a house. (Heaven and Hell #29)

Similarly, he said that there are also three hells opposite to these three heavens:

Because there are three heavens overall, there are also three hells overall. There is a deepest hell that is opposite to the inmost or third heaven; there is a middle hell that is opposite to the middle or second heaven; and there is a highest hell that is opposite to the outmost or first heaven. (Heaven and Hell #542)

Note that since hell is a distorted and inverted reflection of heaven, the highest, or least malevolent hell is opposite to the lowest, or least exalted heaven; and the lowest, or most malevolent hell is opposite to the highest, or most exalted heaven—similar to a mountain whose upside-down reflection appears in a lake.

3. Too many hells to count

In addition to speaking of all of heaven and all of hell collectively in the singular as "heaven" and "hell," and in addition to speaking of there being three heavens and three hells overall, Swedenborg also stated that heaven and hell are divided into myriad communities, each of which is referred to as "a heaven" or "a hell" in its own right.

Further, even each individual angel can be referred to as "a heaven," and by extension, each individual evil spirit in hell as "a hell."

About heaven being distinguished and divided into communities, Swedenborg wrote:

The Heavens Are Made Up of Countless Communities

The angels of any given heaven are not all together in one place, but are separated into larger and smaller communities depending on differences in the good effects of the love and faith they are engaged in. Angels engaged in similar activities form a single community. There is an infinite variety of good activities in heaven, and each individual angel is, so to speak, his or her own activity. (Heaven and Hell #41)

About each angelic community and each individual angel being a heaven, Swedenborg wrote:

Each Community Is a Heaven in Smaller Form and Each Angel a Heaven in Smallest Form

The reason each community is a heaven in smaller form and each angel a heaven in smallest form is that the activity of love and faith is what makes heaven. This good activity is in every community of heaven and in every angel of a community. It does not matter that this activity is different and distinctive everywhere, it is still the activity of heaven. The only difference is that heaven has one activity here and another there. So whenever anyone is raised into any community of heaven, they say that he or she has arrived in heaven. They say of those who are there that they are in heaven, each in his or her own. All the people who have arrived in the other life realize this; so individuals who are standing outside or below heaven and looking off into the distance where there is a gathering of angels say that heaven is there—and over there as well.

It is rather like the situation of officials and functionaries and servants in a royal palace or court. Even though they live individually in their dwellings or in their rooms, some higher than others, still they are in a single palace or a single court, each one involved in a particular function in the service of the king. We can see from this what is meant by the Lord's saying that "in my Father's house there are many dwellings" (John 14:2) and by "the stories of heaven" and the "heavens of heavens" in the prophets. (Heaven and Hell #51)

Later he applies the same principle to hell:

Because hell is differentiated into as many communities as heaven is, there are also as many hells as there are communities of heaven. As each community of heaven is a heaven in smaller form (see #51–58), so each community of hell is a hell in smaller form. (Heaven and Hell #542)

Although I am not aware of any place where Swedenborg stated explicitly that each evil spirit in hell is a hell in smallest form, the inverse parallelism that he established between heaven and hell suggests that the same principle would apply to hell as well.

Based on this, if Swedenborg spoke of each community of hell as "a hell" (in smaller form), and by extension, if even each individual evil spirit in hell could be considered "a hell" (in smallest form), then according to Swedenborg there are too many of these smaller and individual hells to count.

This, I suspect, is what Chesterton was referring to in his line:

One small child in the dark can invent more hells than Swedenborg.

If I am correct, Chesterton was using Swedenborg's countless hells as a rhetorical device to convey with a touch of wry humor the idea that small children can conjure up in their imaginations more monsters, bogies, and goblins (to use Chesterton's own words in the immediate context of the quoted line) than it is possible to count.