Scholars interpret Hebrews 10:29 in a number of different ways. But, my view is that the passage is addressed to the visible church, to professing/confessing Christians, and it warns against final apostasy and the penalty of hell.
The writer to the Hebrews is addressing professing Christians, some of whom are believers and some of whom are unbelievers, even though he refers to them all as "sanctified" (Heb 10:29). The New Testament letters frequently address the visible church as "elect," "justified," "called," etc. See Rom 1:7; 1 Cor 1:2, "to those sanctified in Christ Jesus;" 2 Cor 1:1; Gal 1:1-4; Eph 1:1-14; etc. The authors of the New Testament speak in these terms, even though not everyone in the visible churches of Corinth, Ephesus, Galatia, and Rome was actually "elect," "called," or "sanctified." For example, we know that some of the professing Christians in the New Testament churches committed apostasy (such as Hymenaeus and Alexander from Ephesus: 1 Tim 1:3, 19-20; cf. 1 Jn 2:19). The Bible often refers to false professors as people who "believe" (Lk 8:13; Jn 8:31, 37) because that's how these professors would describe themselves. The fact that the writers of the New Testament speak of all the members of the visible church as though they are Christians and refer to visible church members in terms that identify them as Christians is called a "judgment of charity." That is, Paul and the other New Testament writers "charitably judged" that visible church members were actually what they claimed to be. They referred to visible church members in terms that they would have used of themselves.
Hebrews 10:29 is speaking of visible church members who professed to be sanctified. Therefore, the warning is addressed to professing Christians, to both genuine and false believers.
The author of Hebrews is warning that if even a genuine believer were to reject Christ and profane the blood of the covenant, he would fall away and go to hell (Heb 10:26, 31). Now, the writer says that this will not happen to genuine believers: see Hebrews 10:39, "We are not of those who shrink back and are destroyed, but of those who have faith and preserve their souls." But, the reason such warnings are important, even for believers who will never fall away, is that according to Louis Berkhof, "They prompt self-examination and are instrumental in keeping believers in the way of perseverance. They do not prove that those addressed will apostatize, but simply that the use of means is necessary to prevent them from committing this sin. Compare acts 27:22-5 with verse 31 for an illustration of this principle" (Systematic Theology 548).
Still, it is true that some of the visible church members who are here called "sanctified" (because they professed to be such) may have actually fallen away from their profession, committed apostasy by returning to their former way of life in Judaism, and gone to hell. These confessors/professors never truly believed in the first place, but they were charitably called believers because they professed belief. Fred Malone writes, "The book of Hebrews is dealing with confessors (3:1; 4:14; 10:23) who may prove false" (Baptism of Disciples Alone, Revised and Expanded 248). Hebrews 3:1 says, "Consider Jesus, the apostle and high priest of our confession." Hebrews 4:14 says, "let us hold fast our confession." Hebrews 10:23 says, "Let us hold fast the confession of our hope." Thus, the only people in view in the book of Hebrews are those who have given a credible profession of faith and have been subsequently baptized and incorporated into the visible church. People who have confessed Christ, been baptized subsequent to that confession, and joined a local church sadly can and do commit apostasy because some confessors are true believers, while others are not. This is the phenomenon addressed in the book of Hebrews.
In conclusion, Hebrews 10:29 warns visible church members (charitably judged: "sanctified") not to turn away from Christ, and it warns that if anyone turns from Christ, he will go to hell. It warns both genuine believers and false believers. This warning is one of the means by which genuine believers are preserved in faith, and it is one of the means by which hypocrites can be exposed and may actually be converted to the salvation of their souls.
The warning of Hebrews 10:29 is a means of grace to bring false professors to faith, to keep genuine believers in the faith, and it explains what happens to those who once professed faith but now reject Christ.