A sacrament is a Christian ritual which delivers grace to the soul. Sacraments are sensible signs, meaning they are detectable by the senses. There are two classes of sacraments; sacraments of the living and sacraments of the dead.
Sacraments of the living are only to be administered when the soul of the receiver is in a state of sanctifying grace, that is, when there are no mortal (damning) sins on the soul. Sacraments of the living include Holy Communion; the consumption of the body of Christ, Confirmation; the anointing of adolescents to become ‘soldiers of Christ’, Holy Matrimony; the joining of man and wife in marriage, and Holy Orders; the initiation of a priest.
Sacraments of the dead include baptism, which is the washing of away of original sin (the sin which all are born with on account of the fall of Adam and Eve) and all other sins committed prior to baptism. The reception of this sacrament marks the initiation into the church. Next is Penance, the confession of sins to a priest in order to regain the state of sanctifying grace. Next is Extreme Unction, or the anointing of the sick, in which a soul is prepared for death. Extreme Unction is in a sort of grey area, because it is usually administered after Penance while the soul is in a state of grace, but can be administered if the partaker is not able to make a confession. Eastern Orthodox and Roman Catholics practice all seven of these sacraments. Protestants, however, generally only practice Baptism and Holy Communion.
There exist two types of punishment due to sin; temporal punishment and eternal punishment. Eternal punishment is the damning of a soul to hell forever. It is incurred when someone dies with mortal sins on their soul. Eternal punishment is wiped away when the sacrament of Penance is received. Temporal punishment is incurred with every sin, and is not canceled with Penance. Temporal punishment consists in spending time in a place called purgatory, which is a where the cleansing of souls before they can enter heaven takes place. Indulgences are acts that reduce or even eliminate temporal punishment due to sin. They can be obtained by doing simple acts, like saying a specific prayer, or visiting a sacred place, or reading the Holy Scripture. Indulgences can also be offered up to the souls in purgatory to reduce the time they have to spend there as well.