Translation: O sinless one, the mode of goodness, being purer than the others, is illuminating, and it frees one from all sinful reactions. Those situated in that mode become conditioned by a sense of happiness and knowledge.
Explanation: This verse describes how mode of goodness (sattva guna) binds the jiva. This mode is characterized by knowledge and happiness. It should be understood that knowledge means knowledge of the real nature of material world (that it is temporary and inherently not a source of enjoyment) and happiness is the tranquility of the senses. The association of the jiva with happiness, which is the product of peacefulness, and the association of the jiva with knowledge, which is the product of illumination, produce the misidentity of "I am happy, I am learned." Thus, from happiness and knowledge whose quality is to produce these designations, the jiva develops his misconception of himself.
Arjuna is called "O sinless one," to indicate that he is personally free from these two sins of the mode of goodness (knowledge and happiness). One may wonder why these qualities are considered as sins? Srila Prabhupada explains this as follows. "This sense of advanced happiness in conditioned life makes them bound by the mode of goodness of material nature. As such, they are attracted toward working in the mode of goodness, and, as long as they have an attraction for working in that way, they have to take some type of body in the modes of nature. Thus there is no likelihood of liberation, or of being transferred to the spiritual world. Repeatedly one may become a philosopher, a scientist or a poet, and repeatedly become entangled in the same disadvantages of birth and death. But, due to the illusion of the material energy, one thinks that that sort of life is pleasant."