What does Psalm 32:2 mean?

In this verse David writes again (Psalms 32:1) about the blessedness of the person whom God has forgiven. He most likely is thinking of his own experience (Psalm 32:3) with deep moral failure (2 Samuel 11—12). David resisted admitting his own guilt and suffered the consequences.

The word iniquity means something twisted or warped, or to a path which deviates from the intended course. Sinning reveals a twisted heart and mind (Jeremiah 17:9). Instead of hating sin and resisting temptation (1 Corinthians 10:13), the sinful heart and mind are warped. It sees sin as desirable instead of destructive. But the repentant believer (John 3:16–18) receives full pardon for his sin (John 3:36). That full pardon requires an admission of guilt, however—to stubbornly ignore our own sin is to leave our relationship with God strained (1 John 1:8–10).

According to this verse, the Lord does not count moral errors against the believer who honestly and sincerely confesses them. This statement reminds us the believer is justified: standing before God just as if the sin had never occurred at all. Romans 3:24 affirms that believers "are justified by his grace as a gift, through the redemption that is in Christ Jesus." Ephesians 1:6–7 attributes the blessings of forgiveness and acceptance to redemption which only comes through the blood of Christ. David experienced forgiveness when he stopped being deceitful (Psalm 51:3–4).