One of the most basic tenets of Christianity is that Christians are sinners who have been saved by God's grace. And it follows, that if Christians are saved by grace, they should not be controlled by any kind of law or legalism. The word "grace" is often used by Christians, but not everyone is able to fully articulate what it means. It is not so much that it is misunderstood, but that it is non-understood; rather like understanding the processes behind turning on a water faucet. We don't really know why or how the water comes out -- our grasp of the situation is quite weak. We are simply content that the water flows. We look at grace in much the same way. We feel happy that it happens and do not think deeply about it. Buy we need to grasp the substance of grace, and to begin to do so, we need to define it.
A good place to begin when defining Biblical terms is to look at the word in the original language. The Greek word translated "grace" is charis, meaning: a gift, a benefit or favor. In the New Testament, this word took on special significance as the divine favor bestowed upon us by God when he gives us salvation. Furthermore, this favor is viewed a being undeserved. It has been freely given to us by God with no strings attached, no prerequisites for us to fulfill, and without deeds to be done to win this favor. Mercy is very similar to grace in that it rescues the troubled soul from its desperate situation. But mercy may be shown indifferently. Grace always comes through love, and in particular, God's grace is always joined with his mercy as it flows from his love. "How great is the love the Father has lavished on us, that we should be called the children of God! And that is what we are!" (1John 3:1)
Although we do not and cannot do anything to merit this favor from God, God works actively to give us grace. It comes into our souls by his power. We do not work to receive grace, but God works to give it to us. Once we receive it, its power is not drained or contained. It becomes the energizing force behind our daily experience of living the Christian life. The Apostle Paul centered his prayer for the believers around this truth: "I pray that out of his glorious riches" (one of which is grace) "he may strengthen you with power through his Spirit in your inner being, so that Christ may dwell in your hearts through faith." (Eph. 3:16, 17) Because Grace only comes from God, we are entirely dependent on him for our salvation. But this does not begin and end with the act of conversion. It is an ongoing action. "For it is by grace you have been saved, through faith -- and this not from yourselves, it is the gift of God." (Eph. 2:8) We are always receiving the gift of salvation, in much the same way as we are always receiving light and heat from the sun, and we cannot live without it.
The saving grace that Christ gives us causes us to respond in thankfulness. When the church celebrates the grace that was given to us by the broken body and shed blood of Jesus, it is called the Eucharist or Thanksgiving. Receiving it and thereby recalling the story of redemption is a response or "work" of praise. In addition, when God gives us salvation, he gives us other gifts (charisms,) which we are called upon to use in order to be administrators of God's grace to others. We do not, nor can we work to receive grace, but we take grace and its accompanying power to do God's work through the Holy Spirit who works in and through us.
The point we must always remember about grace is that it does not stop. If we think that we have been saved by grace at such-and-such a point in time, we have stopped. If we merely feel good because of God's grace, we have stopped. If we think that grace is not associated with what we do, we have stopped. Sometimes in our efforts to emphasize that salvation is all of grace (period,) we have forgotten that anything composed of grace is also a living, active dynamo of power, and it must act accordingly.
Today we are quite intent upon criticizing the idea of legalism -- the idea that that what one does or does not do is vital to how the Christian life is lived out. But in this mode of thinking it is very easy to gravitate to the opposite end of things -- doing nothing, just feeling the feelings. God does not intend for us to work our way to salvation, or to work to maintain or keep our salvation. The price paid for his gift of grace was too great for that. But, once we are saved, we are expected to live a life of active thankfulness, as described in 1Pet. 2:9: "[you] declare the praises of him who called you our of darkness into his wonderful light." And when we begin to do these things, to practice the power of grace, to understand its definition, it will bring about a revolution in Christian living.
some thoughts from:
Easton, Burton Scott, "Grace." from the International Standard Bible Encyclopedia, ed. by James Orr, Wm. B. Eerdmans Pub. Co., 1939 (online edition)