Well then, I'm having trouble comprehending it. Sometimes I just need it to be spelled out for me, sorry about that.
If you sin against your neighbor, you confess to your neighbor that you have sinned, apologize for it. If they forgive you, then your neighbor has in fact forgiven you for your sin.
Now private confession and absolution still a part of the Lutheran church too although to understand its role you first have to understand the Lutheran church's understanding of "The means of grace"
Basically a pastor described the term "means of grace" to me as this. God has the grace, but he has to get it to you. It would be like me having $500 that I want to give to you. But it does you no good unless I can find a way of getting the money to you. Now there are multiple ways in which I might do that, just like God has multiple ways of getting grace to you.
One of those ways is through the word (scripture) which carries the promise of the forgivness of sins.
Another is through the sacraments, communion and baptism.
Private confession and absolution are another. We belive this because Jesus gave the church the power to bind and loose sins before his accention. By confessing sins to a representative of the church (normally a pastor) he has the authority derived through the church (Not through a man) to forgive your sins through Christ, or if he finds you unrepentant to refuse to forgive them.
Private confession is not necessary because there are other means of Grace. However Luther found it to be helpful for people's conciousness (sp?) so he belived it should be retained for that reason. Historically speaking Luther especially when he was a monk had a near obcession with his sins and was afraid that he was not forgiven. Hence he made use of private confession extremely often.
In the US private confession and absolution has fallen into disuse in a lot of Lutheran churchs, and there are quite a few pastors who have been trying to encourage their congregations to start using private confession again.
Unlike Roman Catholics and Eastern Orthodox we don't think Private confession is the be all, end all of the forgiveness of sins. In fact some of our doctrinal statements state that enumerating all of one's sins is not necessary, partially because we belive that would be impossible to do. But also because there are other ways of obtaining grace for all of your sins both known and unknown.
However like Roman Catholics and Eastern Orthodox our pastors are under the "seal of confession" which essentially means "Whats said in confession, remains in confession." and they don't talk about it with anyone else. I think the only difference between Roman Catholics and Lutherans in that matter is I belive Lutheran pastors are allowed to discuss it if it was a crime.
Its my impression that if you confessed murder to a RC priest, he may withhold forgiveness if you don't turn yourself in, but he can't turn you in on the basis of confession. But I think a Lutheran pastor is allowed to turn you in on the basis of a confession.