This is a text from the Tanna d'bei Eliahu 1:3. It begins by quoting Tehilim (Psalms) and then asks for the meaning of the quote:
Psalms 139:16 'Your eyes saw my unformed substance; and in your book all things were written...' What does this text mean? In the future the Kadosh Baruch Hu will sit in his big Beit Midrash and the righteous will sit before him. And he will say to them, "My sons, in this one's generation, this is how he did Torah and this is how I did righteousness with him. And this person-- this is how he did Torah and this is how I did righteousness with him. However, I do not remember his sins and they do not arise in my mind as it says, "Remember not the former things, nor consider the things of old.," and it says "The former things shall not be remembered."
In order to understand how the drash insists that as opposed to good things that are recorded in God's book, their sins are not recorded by God, one has to look at the two pasukim in Isaiah. The first one says that God will not remember the "rishonot" or "former things." But how do we know that the former things are the sins and not the good things that people do? Because in Isaiah 65:17, it is mentioned again that the former things will not be remembered-- and it is clear by looking at the pasuk before that the former things are bad things-- it is "former troubles" that are forgotten.
See here:
Isaiah 65:16. So that he who blesses himself in the earth shall bless himself by the God of truth; and he who swears in the earth shall swear by the God of truth; because the former troubles are forgotten, and because they are hidden from my eyes.
17. For, behold, I create new heavens and a new earth; and the former shall not be remembered, nor come to mind.
Therefore, what the Pasuk in Tehillim means is that the things that God records in his book are only the good things. The two psukim brought at the end of this text assure the reader that while the good is remembered, the bad is forgotten.
Why this text is beautiful: Because it stresses God's forgiving nature. Because the image of God sitting around the table with those who have acted dutifully is a wonderful image. Because it affirms that Torah in different eras is done differently and that it is the goal of people to reactivate Torah in their times.
