Martin Luther makes in simple terms the distinction between Law and Gospel:
The Law is a statement of debit - this is so because we have not kept God's Law perfectly and are in His debt.
The Gospel is a statement of credit - this is so because Jesus paid our sin debt by His suffering and death on the cross.
The Law shows us our sin. The Gospel shows us our Savior. And we can't really see what Jesus has done for us and offer sincere thanksgiving to our Lord until we have felt the weight of the Law. When that happens, it makes the Gospel all the sweeter for us. We are saved by grace through faith alone in Christ our Lord. And that's good news!
Luther quote from, "Martin Luther - In His Own Words." by Kilcrease and Lutzer, page 44
