This verse appears in Soorat al-Najm, where Allaah describes the attributes of the doers of good who are the people of Paradise. Allaah says (interpretation of the meaning): 

“And to Allaah belongs all that is in the heavens and all that is in the earth, that He may requite those who do evil with that which they have done (i.e. punish them in Hell), and reward those who do good, with what is best (i.e. Paradise).

32. Those who avoid great sins and Al‑Fawaahish (illegal sexual intercourse) except the small faults, verily, your Lord is of vast forgiveness”

[al-Najm 53:31-32]

The mufassireen and imams differed as to what is meant by lamam (translated here as “small faults”). Their views include the following: 

1-It was narrated from a number of the salaf that it refers to committing a sin once, then not repeating it, even if it is a major sin. Al-Baghawi said: This is the view of Abu Hurayrah, Mujaahid and al-Hasan, and was narrated from Ibn 'Abbaas.

2-Sa’eed ibn al-Musayyab said that it refers to what crosses one’s mind.

3-Al-Hasan ibn al-Fadl said: Lamam (“small faults”) refers to a look that is not deliberate, which is forgiven. But if a person looks again, this is no longer a small fault, rather it is a sin.

4-A group of scholars were of the view that lamam refers to what they did during the Jaahiliyyah, before they became Muslim, so Allaah will not take them to task for it. That is because the mushrikoon said to the Muslims: “Yesterday you used to do these things alongside us.” So Allaah revealed this verse. This is the view of Zayd ibn Thaabit and Zayd ibn Aslam.

5-The majority of scholars are of the view that lamam refers to minor sins.

Al-Bukhaari (2643) narrated that Ibn ‘Abbaas (may Allaah be pleased with him) said: I have never seen anything that explains lamam more clearly than what Abu Hurayrah narrated from the Prophet (peace and blessings of Allaah be upon him): “Allaah has decreed for the son of Adam his share of zina (adultery), which he will inevitably commit. The zina of the eyes is looking, the zina of the tongue is speaking, the zina of the heart is wishing and longing, and the private parts will confirm that or deny it.” 

Al-Raaghib said: Lamam means committing sin, and refers to minor sins.  

What is meant by lamam is that which Allaah mentioned in the verse where He said (interpretation of the meaning): 

“Those who avoid great sins and Al‑Fawaahish (illegal sexual intercourse) except the small faults (lamam)…”

[al-Najm 53:32]

… which is forgivable. 

And Allaah says in another verse (interpretation of the meaning): 

“If you avoid the great sins which you are forbidden to do, We shall expiate from you your (small) sins (lamam)…”

[al-Nisa’ 4:31]

It may be understood from these two verses that lamam refers to small sins, which will be expiated by avoidance of major sins. 

Al-Nawawi (may Allaah have mercy on him) quoted the words of al-Khattaabi, then he said: 

This is the correct interpretation of the word lamam. And it was said that it means thinking of doing something but then not doing it; or an inclination towards sin but not persisting in it. And there are other views which are not clear. The basic meaning of the word lamam is an inclination towards something and seeking it, but not on an ongoing basis. And Allaah knows best. 

Al-Haafiz said: 

What may be understood from the words of Ibn ‘Abbaas is that the word lamam refers to specific minor sins, or it may be understood that these minor sins are one of the things meant by lamam. 

Al-Tirmidhi (3284) narrated from Ibn ‘Abbaas (may Allaah be pleased with him): “If you avoid the great sins which you are forbidden to do, We shall expiate from you your (small) sins…” [al-Nisa’ 4:31]. The Prophet (peace and blessings of Allaah be upon him) said: “When You forgive, O Allaah, You forgive a great deal, for who among Your slaves has not committed sin?” Classed as saheeh by al-Albaani in Saheeh al-Tirmidhi. 

It says in Tuhfat al-Ahwadhi: 

The scholars differed concerning the meaning of lamam, but the majority are of the view that it refers to minor sins. This view appears to be correct. 

Al-Qurtubi (may Allaah have mercy on him) said: 

“except the small faults” refers to minor sins which no one can avoid falling into except the one whom Allaah protects. 

Ibn Jareer said: 

The most correct view concerning this, in my opinion, is the view of those who say that “illa” (except) is istithna’ munqati’(an exception where the thing excluded is not of the same type as the things mentioned before the word illa). What is meant by the phrase “Those who avoid great sins and Al‑Fawaahish (illegal sexual intercourse) except the small faults” is faults that are less serious than major sins and immoral actions that incur hadd punishments in this world and punishment in the Hereafter. They will be forgiven for these small faults. In my view this is akin to the verse in which Allaah says (interpretation of the meaning): 

“If you avoid the great sins which you are forbidden to do, We shall expiate from you your (small) sins, and admit you to a Noble Entrance (i.e. Paradise)”

[al-Nisa’ 4:31]

So in return for avoidance of major sins, Allaah has promised forgiveness for lesser sins, of which the Prophet (peace and blessings of Allaah be upon him) said: “The eyes commit zina, the hands commit zina, the feet commit zina, and the private parts confirm that or deny it.” That is because there is no hadd punishment for anything less than intercourse. This is forgiveness from Allaah in this world, whereby a person is let off the punishment, and Allaah is too generous to go back to something that He has forgiven. End quote. 

In the saheeh Sunnah, the word lamam is used to refer to one who commits a sin once, but does not persist in it. This is in accordance with the meaning of the word lamam in Arabic. 

In hadeeth al-ifk (the hadeeth which tells the story of the lie fabricated against ‘Aa’ishah) it says: 

“If it so happened that you committed a sin (in kunti almamti bi dhanbin) then ask Allaah for forgiveness.”

Narrated by al-Bukhaari, 2661; Muslim, 2770. 

Al-Nawawi said: What this means is: if you have a committed a sin which is not something that you usually do. This is the basic meaning of the word lamam. 

Al-Sa’di (may Allaah have mercy on him) reconciled between the two meanings in his Tafseer, where he says (p. 976): 

“Those who avoid great sins and Al‑Fawaahish (illegal sexual intercourse)” means: they do the duties that Allaah has enjoined upon them, omission of which is a major sin, and they abstain from major forbidden actions such as zina, drinking alcohol, consuming riba, murder, and other major sins, “except the small faults”, i.e., minor sins in which a person does not persist, or which a person may do rarely. The fact that he may have done them does not mean that he is no longer regarded as a doer of good. If he also does the duties that are required of him and avoids haraam things, he will be forgiven by Allaah, Whose forgiveness encompasses all things. Hence Allaah says (interpretation of the meaning):  

“verily, your Lord is of vast forgiveness”

[al-Najm 53:32]

Were it not for His forgiveness, all lands and people would be doomed. Were it not for His pardon and forbearance, the heavens would fall upon the earth, and no creature would be left alive on the face of the earth. Hence the Prophet (peace and blessings of Allaah be upon him) said: “The five daily prayers, from one Jumu’ah to the next and from one Ramadaan to the next, are an expiation for whatever (sins) come in between them, so long as you avoid major sins.” 

The verse does not mean that we are given permission to commit small faults or minor sins. Rather what it means is that if we avoid major sins, then whatever minor sins we fall into by mistake will be forgiven because of that avoidance of major sins. 

And Allaah knows best.