If we say that we have fellowship with Him and yet walk in the darkness, we lie and do not practice the truth. But if we keep living in the light as he himself is in the light, we have fellowship with one another, and the blood of Jesus his Son cleanses us from all sin.
If we claim Christianity yet live in sin and our religion is false. How many people claim to be Christians yet live their lives as anything but? Although it is true that this side of heaven we will struggle with sin in our lives, no true Christian can walk in habitual sin and experience the peace that comes from true fellowship with God.
The Gnostics of John's day indulged in any carnal behavior they desired, claiming that the body was evil and separate from the spirit. Since the body was evil it would do what it pleased, but the spirit and mind was still good. Today we are much less honest about our sinfulness. Like the Pharisee in the parable we thank God that we are not like other sinners. We categorize sins and never seem to place ours on the level of others. We lie to ourselves and others, and do not practice the truth.
Some commentators believe "fellowship with one another" refers to other believers. When we fellowship with other believers and have the strength of character to hold one another accountable for our actions we are able to live in the light as the blood of Jesus cleanses our lives of sin. Others (for grammatical Greek reasons) believe it refers to believers having fellowship with God. The fellowship and communion with God results in the blood of Jesus cleansing us from every sin - progressively being sanctified into the image of Christ.