I wonder, really, what translators think when they hit this passage. The clear similarity between NIV and KJV indicates their academic honesty over time (though a retranslation of my own would be more convincing, I'll admit ;). There is a lot that the Bible doesn't clarify or expand on, and this is one of those facts. (Another is “In my Father's house are many mansions” along with the varying “reward in heaven” individuals receive discussed elsewhere in the New Testament.)
So, what is this little gem? A passing mention? A passage clearly denouncing the reality of the resurrection? (No. Seriously. I have been told that to my face by a
Having more information helps make sense out of this. First of all, Christ says that one must be baptized in order to enter the Kingdom of God. How, then, is God just and fair (in any sense) if someone who has never even heard of Christ is condemned by that fact to never enter heaven?
Resolution of these tidbits came in January of 1836 in Kirtland, Ohio. Joseph Smith was given a vision (recorded in the Doctrine and Covenants (of the Church of Jesus Christ of Latter-Day Saints) as section 137) in which he saw several aspects of heaven, from the gate, the throne, the streets (“which had the appearance of being paved with gold” v.4, note they're not actually gold), to the people that are there. This included Adam and Abraham, naturally, but also Joseph's parents and long-deceased brother Alvin. Here is the highest degree of heaven that has a very clear admission requirements, yet here is Alvin, who was never baptized. This made Joseph curious.
The Lord then informs us that yes, indeed, the dead can be redeemed. Any who would have received the gospel of Christ in its totality had it been presented to them are candidates for this degree of glory—that is, to live with God in His presence and be joint-heirs with Christ. (Notably He also notes that young children who die are also there.)
This is a very merciful and peaceful idea. The peace that passeth understanding that comes because of faith in Christ is not limited to the minority who have even heard of Christ in history; beyond death the Lord makes provision for those who have not heard to hear, learn, and accept if they so choose so that “they might be judged according to men the flesh, but live according to God in the spirit.” I feel this lends a completeness to my view of the universe that is otherwise lacking.
(I've never heard the question of salvation for the young and the ignorant squared with quite so rigorously in any other Christian theology. I've knocked a lot of doors and had many discussions, and this came up once in a while.)