The number of graves in the left(resource) panel is going down over time, but the land that they take is never returned, and the number of graves in the center(production) panel never changes.
However, if I remove all graves, and then rebuild them, then I can free up the land.
I had 21.3k graves in the production panel. I had 1k graves in the resources panel. I removed all 21.3k graves in the production panel, and recouped the 21.3k land they were using. At this point, I had 1.1k bodies laying around. I then rebuilt 2k graves, and they (almost) all were buried.