Verse 1: And you hath he quickened, who were dead in trespasses and sins; The word quickened means to be made alive. Just as he was made alive, so we too. However, notice what it is in italics in the KJV. It literally says, And you, who were dead in trespasses and sins. He is reminding them of where they once were. In other passages, Paul points out that we were blind (2 Corinthians 4:3-4), slaves to sin (Romans 6:17), aliens (Ephesians 2:12; Ephesians 2:19), children of wrath (Ephesians 2:3), under the power of darkness (Colossians 1:13), i.e., nothing good. Also notice that he says in trespasses and sins. Trespass speaks of willful disobedience and sins speak of simply failure to live up to the standard.
Verse 2: Wherein in time past ye walked according to the course of this world, according to the prince of the power of the air, the spirit that now worketh in the children of disobedience: The emphasis is that dead people walk according to the course of this world and according to the prince of the power of the air. His point is that people who have been made alive no longer do either (Colossians 2:13; 1 Corinthians 15:1-4; 2 Corinthians 5:17). The children of disobedience are the lost. The Greek indicates that these have no faith.
Verse 3: Among whom also we all had our conversation in times past in the lusts of our flesh, fulfilling the desires of the flesh and of the mind; and were by nature the children of wrath, even as others. He is saying that all of us in time past lived according to the lusts of the flesh (1 John 2:16) and fulfilling its desires, and were just as much children of wrath as the heathen were (Isaiah 53:6; Romans 1:21-25; Romans 3:9-12; Romans 5:12-19).
It has been said that while a dead man might feel comfortable in a coffin, a live man does not. When we were spiritually dead in our trespasses and sins, it was all we knew, but now that we have been made alive, it is no longer comfortable. Children of the day no longer feel comfortable walking in darkness (Ephesians 5:8; Ephesians 5:11).
Verses 4-5: But God, who is rich in mercy, for his great love wherewith he loved us, Even when we were dead in sins, hath quickened us together with Christ, (by grace ye are saved;) But God has to be two of the greatest words in all of the Bible. He loved us anyway and in spite of ourselves. I have heard it said that God does not love me because of who I am but in spite of who I am. This also reveals that God's motivation was love toward us: love (Romans 5:8).
Notice it says that he hath quickened us together with Christ. That means to be made alive. It is also used in verse 1. Paul again seems to be pointing out the power of God as evidenced in the resurrection and his exaltation to the right hand of God that he just mentioned in chapter 1:19-23.
Mercy and Grace
Notice that he mentions both mercy and grace meaning they are not the same thing. Mercy is not getting what you deserve while grace is getting what you don't deserve.
By Grace are Ye Saved
Notice also in parenthesis he says by grace ye are saved. In other words, Paul wants them to understand that their salvation was completely unmerited and was not the result of anything that they had done.