Many thoughts below taken from sermons by Mcarthur Piper, and Spurgeon (1 & 2)
God is light; God is truth. When you draw near to God, you do not find a dark and foreboding truth. Light is painful to eyes long accustomed to darkness, but soon the Light brings the promise of freedom, hope, and joy. When the Light truly shines on your life you cannot help but see the glaring blemishes on your soul; you cannot help but see the path illumed which you should be walking.
John lays out a test by which you can measure someone's claim to be a Christian in true "Son of Thunder" fashion. He has already indicated that no one can hope to have eternal life and enter into heaven unless they have a proper understanding of Jesus Christ. The second test measures true spiritual condition – the sin test. We live in a society that does not want to recognize the singularity of Jesus Christ as the only Savior or its guilt before God for violation of His Law. But true believers understand their sinfulness.
Proverbs 28:13 says, "He who conceals his transgressions will not prosper, but he who confesses and forsakes them will find compassion." It takes confession and repentance to receive God’s mercy. Many today do not fully acknowledge their sin although they may admit occasional mistakes or bad choices. Some even preach that the love of God would not condemn man to Hell, but this powerless gospel is not good news. A gospel that only wins lip service is no different than all the other philosophies of the world. Such a gospel produces a Christianity that encourages lukewarm church-goers that they are safe from God's wrath because of some inherited mental assent to the love of God. Such a gospel accounts for how 40 million people can claim to be born again in America at the same time that our moral condition is an all time low of corruption inside and outside the church.
True Christians, on the other hand, are people who confess as their conscience brings sin to mind, slowing down their self-destruction. David said, "When I kept silent about my sin, my body wasted away through my groaning all day long." The man who covers his sin in this life heaps upon himself a severe and painful burden. The man who covers his sin in this life will also have it uncovered in the next life. There will be no secrets.
You can't claim to be in the light while you're walking in darkness. It's amazing how many within the framework of Christianity - even religious leaders - claim to know God, but when you look at their daily lives you see a walk of death, of sin and untruth. Anyone who would twist the Scriptures and force his own meaning on them is not in the Light - however learned a philosopher he may be! A Christian can never walk comfortably in darkness.
John is not saying we will never sin. He is saying that is not the pattern of our lives. No one can deny sin and claim fellowship with God. If you're really walking in the Light, you're going to be overwhelmed with the sin that is there. Every man who, however limpingly, is walking in this Light is being transformed into the very image of Christ. Jesus himself said, “Therefore you are to be perfect, as your heavenly Father is perfect.” If we take anything short of absolute perfection as our model of life we shall certainly fall short of the Glory of God!