Last week when I talked about forgiveness, I included the theology of the Church mentioning indulgences. The idea came from Fr. Tony so I have to give him credit for this.
(CC)
1471 What is an indulgence? "An indulgence is a remission before God of the temporal punishment due to sins whose guilt has already been forgiven, which the faithful Christian who is duly disposed gains under certain prescribed conditions through the action of the Church which, as the minister of redemption, dispenses and applies with authority the treasury of the satisfactions of Christ and the saints." "An indulgence is partial or plenary according as it removes either part or all of the temporal punishment due to sin." Indulgences may be applied to the living or the dead.
(CC)
1472 To understand this doctrine and practice of the Church, it is necessary to understand that sin has a double consequence. Grave sin deprives us of communion with God and therefore makes us incapable of eternal life, the privation of which is called the "eternal punishment" of sin. On the other hand every sin, even venial, entails an unhealthy attachment to creatures, which must be purified either here on earth, or after death in the state called Purgatory. This purification frees one from what is called the "temporal punishment" of sin. These two punishments must not be conceived of as a kind of vengeance inflicted by God from without, but as following from the very nature of sin. A conversion which proceeds from a fervent charity can attain the complete purification of the sinner in such a way that no punishment would remain.
(CC)
1478 An indulgence is obtained through the Church who, by virtue of the power of binding and loosing granted her by Christ Jesus, intervenes in favor of individual Christians and opens for them the treasury of the merits of Christ and the saints to obtain from the Father of mercies the remission of the temporal punishments due for their sins. Thus the Church does not want simply to come to the aid of these Christians, but also to spur them to works of devotion, penance, and charity.
The Catechism is teaching us that sins are forgiven, but punishment for sin is not taken away by confession. There must be more to be reconciled with God. There are some ways here on earth by praying certain prayers or making sacrifices that can satisfy this punishment. If we are not able to complete all the required satisfaction for sin on earth, then the Church talks of Purgatory, a place where we are purified for our sins. We can do Indulgences for the deceased who are also in Purgatory. That is what our prayers and the Masses offered provide for them. I hope this clarifies the explanation. If not, please contact Fr. Tony or myself about it.