The first paragraph of Part II.A. explains that it is "sin" to be in despair before God or with the conception of God. The lengthy second paragraph explains that "poets" may be able to discuss religious matters even though they do not lead perfect religious lives.
Chapter 1 explains how being "before God" changes the types of despair described earlier in the book. Just as people experience more intense despair when they are aware of despair, so do people experience more intense despair when they measure their condition according to God's standards rather than human standards. Likewise, just there is a hierarchy of forms of despair, so is there a hierarchy of sins, ranging from sins of the flesh to more spiritual forms of revolt against God. Nevertheless, the definition of sin as despair "before God" can account for all particular sins, since it captures sin's fundamental form.
"Faith" is a state of being oneself and wanting to be oneself while maintaining a relationship with God. Thus the opposite of sin is faith, not virtue.
Chapter 1 is followed by an appendix, which explains that Christianity is founded on the "absurd" proposition that an individual human being can have a personal relationship with God. Christianity is not concerned with history or the human race; it is concerned with the individual human being. This proposition is as absurd as a mighty emperor asking a poor laborer to share his personal thoughts. Just as the laborer might assume the emperor was jesting and making fun of him, so does Christ's teaching seem to insult the intelligence of the non-Christian. Christianity is too absurd to be defended with rational arguments; it is a matter of private belief, of faith.
In Part I, Kierkegaard described despair. He offered definitions, examples, and categorizations to help his readers understand what despair is and why it is a problem. In Part II, Kierkegaard casts the issue of despair in religious terms: despair is sin, and the solution to sin is faith.
As mentioned in the commentary section, the forms of despair described in Part I generally involve a failure to be a human being in the fullest sense. In the first chapter and appendix of Part II, Kierkegaard explains that Christianity defines this failure as sin. According to the appendix, Christianity teaches us that God takes interest in the well-being of every individual human being. It is therefore a sin to be in despair and fail to be the full human being that God wants each of us to be.
Pay special attention to the appendix. This short section offers a concise account of what Christianity is to Kierkegaard. For Kierkegaard, Christ's teachings are absurd from any rational standpoint. Why would an almighty God take any interest in a puny human being? How can a puny human being have a relationship with God? Christianity defies rational understanding. Nevertheless, for Kierkegaard, Christianity is the greatest truth there is, and Christian faith is the highest form of human life, the only form that avoids despair. (Note that the definition of faith at the end of Chapter 1 is essentially identical to the definition of being free from despair that is given at the end of Part I.A.a.)
Kierkegaard's understanding of Christianity creates something of a paradox for us in trying to understand his writings. The Sickness Unto Death seems to be arguing that all people are in despair unless they have faith. If this isn't an argument in favor of Christian faith, then what is it? If Christianity defies understanding and explanation, then what is Kierkegaard up to in his books?
Kierkegaard clearly had strong views about what it means to be a Christian. Maybe he presumed that his Christian readers would be interested in his unique views on their religion. Maybe he was writing just in case there was someone out there who could be helped by his ideas about God. Maybe he didn't really care what everyone else thought of his "absurd" ideas. Or maybe he was trying to show us that rational investigation cannot answer all questions. (See the Overall Analysis and the commentary to Part I.A. for more on this interpretation of Kierkegaard.)
Kierkegaard was an unusual philosopher and his works pose unusual challenges for the reader. There is no final word on how we should respond to his work. As you consider these questions, you may want to consider the long second paragraph of Part II.A. Kierkegaard may be referring to himself when he describes the "poet" who is able to describe religious truth even though he does not live the perfect religious life.