grace (Gr. charis): good will, loving-kindness, favour
The word grace in the Bible simply means kindness or favor. And while the definition of the word and it's meaning are important, some make the mistake of thinking that the grace of God is simply Him being gracious and showing favor to the world. Now it is certainly true that God does show favor and has shown favor since the beginning of creation, but it's important to understand that God's grace discussed in the Bible isn't talking about simple favor, but something much more.
A means of reconciliation with God
Grace is a single word that indicates a very specific way (or means) for men to be reconciled with God.
For by grace you have been saved... Ephesian 2:8
This isn't saying that we have been saved simply because God is kind. It's saying that the means by which we are saved is something called grace.
So what is this something called grace? Well, let's read further...
For by grace you have been saved through faith, and that not of yourselves; it is the gift of God... Ephesian 2:8
Grace is a means by which God offers you salvation for free, as a gift. No strings attached. No obligation on your part.
You don't need to work for it. You don't need to earn it. You just have to receive or accept it.
A free gift, not a wage
Paul goes on to expound on grace as a free gift by telling us what grace is not: it's not working for something.
For by grace you have been saved through faith, and that not of yourselves; it is the gift of God; not of works, lest anyone should boast. Ephesian 2:8-9
Imagine you lost your job and you really needed a new job to support your family. A friend of yours who owns a business offers you a job working for him. Now that is really kind. We would even call it gracious. But it's so important to understand that his offer is not grace. You see even though it was kind of him to offer you that job, if you don't show up every day and work for your wages, if you don't earn them through your labor, you won't ever get paid. Grace is when God offers you his riches for zero labor.
And this illustration of wages isn't something that I came up with on my own. It's an illustration that the Bible uses in the book of Romans to tell us about the nature of grace.
Now to him who works, the wages are not counted as grace but as a debt. Romans 4:4
When you work for something to earn it, the reward that you worked for is counted as debt, not as a gift. But grace is when God offers you his riches for free without any labor required at all.
So grace is more than just it's definition of kindness or good-will. Grace must be understood to be the means God uses of freely offering us his riches of salvation (and beyond), without any requirement for work on our end to receive it.