The sacrament of Penance is sometimes called Confession or Reconciliation. It is an encounter with God's merciful love and healing and not a place of condemnation. In this sacrament is the ordinary means of forgiveness of mortal sin.
When absolution is given in the sacrament of penance, you are forgiven of all your sins, both mortal and venial. If you had mortal sins forgiven, the state of justification is fully restored through receiving sanctifying grace. You are reconciled with God and with his people, the Church. In addition, you are given consolation and peace that your in right relationship with God. Lastly, the grace of this sacrament provides aid and strength in the battle against future temptation.
The Priest represents both Christ and the Church. When the priest says “I absolve you…” it’s Christ forgiving through his minister. You can have assurance of forgiveness! Jesus himself gave the apostles and their successors this ministry (John 20:21-23) and thus the priest is the extension of Christ's ministry of reconciliation (2 Corinthians 5:18). Confessing your sins to the priest frees you from the shame and guilt and repairs our relationship with God and his Church. Psychologically also, it is freeing to confess your sins out loud to be unburdened from them.
Note that the Priest is bound by the seal of the confessional so you can be assured that nothing will be revealed. The secret of the sacrament of reconciliation is sacred and cannot be violated under any pretext. According to the Catechism, paragraph 2490, "The sacramental seal is inviolable; therefore, it is a crime for a confessor in any way to betray a penitent by word or in any other manner or for any reason."