I am reading John Webster's book "Holiness" for my theology class this semester. The following is an excerpt that really changed my perspective on some of what it means for God to be "holy."
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Rather, God's holiness is the quality of God's relation to that which is unholy; as the Holy One, God is the one who does not simply remain in separation but comes to his people and purifies them, making them into his own possession.
Talk of God's holiness indicates the manner in which the sovereign God relates. As the Holy One, God passes judgement on sin and negates it. Yet the holy God does this, not from afar, as a detached legislator, but in the reconciling mission of the Son and the outpouring of the sanctifying Spirit.
That is, God's destruction of sin is accomplished in his triune acts of fellowship with humanity, in which he condemns [God the Father], pardons [God the Son] and cleanses [God the Holy Spirit] by taking upon himself the situation of the ruined creature, in sovereign majesty exposing himself to our peril and only in that way putting an end to our unholiness. God's 'active opposition to sin' is thus known in the economy of salvation as a 'unity of judgement and grace.'"
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Thanks be to God for His judgment and grace!