What does Romans 4:8 mean?

Paul completes a quote from Psalm 32:1–2, as begun in the previous verse. David wrote that the one whose sin is covered, whose lawless actions are forgiven, is blessed by God. Now he makes a slight change. Blessed is the one against whom the Lord will not count (or not "reckon") his sin.

Again, Paul is making the point that God's decision to not count the sins of which we are guilty against us is a gift of His grace. Paul is rejecting any idea that we somehow pay off our own sins by doing good works to balance them out. That is not a biblical idea. It is false. There is no scale at the gate of heaven on which our good works will be weighed against our sinful choices to determine our eternal fate.

No, God declares us to be righteous (sinless, justified) based only on our faith in Him and not at all on our inadequate works. Without faith in God, all that is left is unforgiven sin and God's angry judgment for that sin.

Very blessed indeed, then, are those forgiven for their sin based on their faith.