We do not presume to come to this thy Table, O merciful Lord, trusting in our own righteousness, but in thy manifold and great mercies. We are not worthy so much as to gather up the crumbs under thy Table. But thou art the same Lord whose property is always to have mercy. Grant us therefore, gracious Lord, so to eat the flesh of thy dear Son Jesus Christ, and to drink his blood, that we may evermore dwell in him, and he in us.
-- The Book of Common Prayer
"Grace" is essentially God acting toward us as He wants, regardless of what we deserve. It's God acting according to His own goodness, not our merits.
As I was driving in this morning, I was thinking about a hymn in Spiritual Songs:
And in past and distant ages, in those courts so bright and fair,
'Ere we were was He rejoicing, all He won with us to share.
That is the grace of God: that in eternity past, the Son of God was excited to share glory with us.
I remember several years ago, in the middle of a rather messy assembly controversy, I made the remark to someone, "A little grace goes a long way." The other brother responded, "Is it really grace to ignore it when someone is wrong?" Over the years I've contemplated that question, and have decided the answer is "Yes!"
Of course, no sooner do I say something like that, than people decide I'm advocating continuing with known sin. That's not really what I'm trying to say. The scripture is very clear that we are to separate from sin that has come to light (I mean, we can't possibly separate from sin we don't know about, right?): 1 Corinthians 5 is explicit. But what about in cases where someone is repentant. Or maybe someone is unknowingly involved in some sin, or perhaps it's not exactly clear what the "correct" thing is: maybe it's in a grey area. In those cases, we are very quick to draw a line and demand people choose a side. At any rate, forming parties around a controversy is always wrong: always the opposite of grace.
The fact is, we show very little grace to one another. Showing grace to one another would start with accepting one another as accepted by God: God accepts us because of Christ; we ought to accept one another the same way.
But in the end, the example of Grace is Christ: the Son of God came down to a wicked world specifically to die so that reprobate sinners could be forgiven. Nasty, dirty, vile sinners were the reason the Son of God came here. And He didn't come with an agenda to reform them; He came with an agenda to die for them.
That is God acting toward us according to His own heart, rather than our merit.