Many understand that grace is unmerited favor, but that is too vague for a proper grasp of this important truth. Grace comes from the Lord and is simply the desire and the power to do God's will. Grace is not mercy.
Mercy is mercy.
Grace is not a license to sin, as some would claim about those who teach that Christians are not under the Law. Grace and faith are both necessary for salvation as God grants repentance to the sinner who humbles himself before Him. All our righteousnesses are as filthy rags. You are only a vessel through which God desires to carry out His plan. All that you do should be by faith from God as you humbly receive His grace.