Under the old covenant (law), we obey out of fear and punishment for disobedience and to earn favour and acceptance by God. As we are human, we will never feel adequate in our ability to fully fulfil His demands and to feel completely accepted by Him. We are constantly living under the cloud of fear and punishment/condemnation as we are not sure whether God is pleased with our deeds.
Under the new covenant (grace), we obey out of gratitude for His favour, love and acceptance He has already given us and not our of fear or punishment. We constantly live under the cloud of His love and acceptance.