Has the Church defined how purgatory and indulgences work? 

Do indulgences work for the restoration/healing of the soul, or are they completely external to the soul's state of being, merely an external satisfaction of God's justice? 

Are we confirmed in grace as saints immediately after death, with purgatory being purely retributive punishment? 

Or are the sufferings of purgatory healing? Or is it both?
"..the throne of Peter, and to the chief Church whence priestly unity takes its source..." -St. Cyprian

"...the Roman Church, the Head of the whole Roman world... from thence flow all the rights of venerable Communion to all persons." -St. Ambrose

"You cannot then deny that you do know that upon Peter first in the City of Rome was bestowed the Episcopal Cathedra, on which sat Peter, the Head of all the Apostles for which reason he was called Cephas,  that, in this one Cathedra, unity should be preserved by all, lest the other Apostles might claim -each for himself- separate Cathedras, so that he who should set up a second Cathedra against the unique Cathedra would already be a schismatic and a sinner." -St. Opatus of Milevis
A good place to start is the Cathechism.
"There are in truth three states of the converted: the beginning,  the middle and the perfection. In the beginning, they experience the charms of sweetness; in the middle, the contests of temptation; and in the end, the fullness of perfection."
-- Pope St. Gregory

“One day, through the Rosary and the Scapular, Our Lady will save the world.”
-- attributed to Saint Domenic
From my understanding, both.  

I think your question is really about what making satisfaction does (indulgences are just one way of making satisfaction, being essentially the communion of saints making satisfaction for one another and this being dispensed through the ministry of the bishop; purgatory is where we make up any satisfaction not made in this life).

The Church teaches three parts to repentance: contrition, confession, and satisfaction (what the Bible calls doing deeds worthy of repentance or bringing forth fruit worthy of repentance).  Making satisfaction both helps make amends for the temporal injustice of sin, but also helps heal the soul by cleansing it of that lingering wound or "stain" caused by this injustice that remains after our reconciliation to God.

The CCC briefly summarizes satisfaction in paragraphs 1459 to 1460 here:

Since this was a major issue controverted by the Protestants during the Reformation, the Roman Catechism published during that time (aka Catechism of Trent) goes into this issue in more depth. I think it's a good source on this topic.

(if you "Ctrl F" the phrase "The Third Part of Penance" on this page it will take you down to the relevant part)
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