Biblical Grace: What Does it Mean?

Biblical grace is an important idea. Ephesians 2:8 tells us that it is by "grace we are saved". So, it is worth our time to grow in our understanding of God's grace: what does grace mean in biblical terms, how does God's grace work, where do we find grace in scripture.

Is biblical grace simply God's unmerited pardon for sin?
What does the word charis mean?
Why is the word sometimes translated "favor"?

1 Peter 5:12 We are also told there is a true grace and therefore a false grace. We want to make sure we are growing in the true grace of God.