Go up to a land flowing with milk and honey; but I will not go up among you, lest I consume you on the way, for you are a stiff-necked people."
After their shenanigans with their false idol, and after receiving their laws and rules for governing their society, the people of God are commanded to go to their promised land. The joy of heading to their wonderful land which God has prepared for them, a land flowing with milk and honey, has been marred by their sinful actions. Instead of being able to enter in with joy, there is a stain which would see them receiving the blessing with shame at their unfaithfulness to God.
The mercy of God is clear in this example. Mercy is when God does not kill every single person who deserved to be punished for idol worship. Mercy is "not getting what you deserve" when you deserve punishment.
The grace of God is also clear. God gives them something wonderful which they don't deserve. Grace is "getting something good which you don't deserve".
These two concepts are central to the bible and are important characteristics of God's being. We are expected to develop these in ourselves.