If we confess our sins: Though sin is present, it need not remain a hindrance to our relationship with God - we may find complete cleansing (from all unrighteousness) as we confess our sins.
i. To confess means, "to say the same as." When we confess our sin, we are willing to say (and believe) the same thing about our sin that God says about it. Jesus' story about the religious man and the sinner who prayed before God illustrated this; the Pharisee bragged about how righteous he was, while the sinner just said God be merciful to me a sinner. (Luke 18:10-14) The one who confessed his sin was the one who agreed with God about how bad he was.
ii. Confess is a verb in the present tense; the meaning is that we should keep on confessing our sin - instead of referring to a "once-for-all" confession of sin at our conversion.
iii. You don't have to go to a confessional to confess your sin. When you are baptized, you are confessing your sin by saying you needed to be cleansed and reborn. When you receive communion, you confess your sin by saying you need the work of Jesus on the cross to take your sin away. But of course, we need to confess our sin in the most straightforward way: by admitting to God that we have done is sin, and asking for His divine forgiveness, based on what Jesus has done on the cross for us.
iv. Our sins are not forgiven because we confess; if this were the case - if forgiveness for a sin could only come where there was confession - then we would all be damned, because it would be impossible for us to confess every sin we ever commit. We are forgiven because our punishment was put upon Jesus, we are cleansed by His blood.
v. However, confession is still vital to maintain relationship with God, and this is the context John speaks from. As God convicts us of sin that is hindering our fellowship with Him, we must confess it and receive forgiveness and cleansing for our relationship with God to continue without hindrance.
vi. Confession must be personal; saying "God, if we have made any mistakes, forgive us" isn't confession, because it isn't convinced (saying "if we made"), it isn't personal (saying "if we made"), it isn't specific (saying "if we made any"), and it isn't honest (saying "mistakes").
c. He is faithful and just to forgive us: Because of Jesus' work, the righteousness of God is our friend - insuring that we will be forgiven, because Jesus paid the penalty of our sin. God is being faithful and just to forgive us in light of Jesus.
i. "He would be unrighteous if He broke His promise ratified by the blood of Jesus." (D. Smith)
d. The promise of 1 John 1:9 shouldn't lead us into sin, saying "Hey, I'll go ahead and sin because God will forgive me." It should lead us out of sin, knowing that God could only be faithful and just to forgive us our sins because the wrath we deserved was poured out on the sin. Since each sin carries with it its own measure of wrath, so there is a sense in which each sin we commit added to the agony of Jesus on the cross.