My "understanding of this passage" is the same as J. Ligon Duncan. Both he and Mark Ross are saying the same thing.

"Christians must take care that we do not deceive ourselves.

Notice His words in verse 21, "Not everyone who says to me, Lord, Lord will enter into the Kingdom of Heaven, but He who does the will of My Father, who is heaven, will enter." Jesus is warning against a merely verbal profession of faith in Christ. He is warning against those who rely on what they say to the Lord, what they say about the Lord, and yet have no reality of the Lord’s lordship in their own lives. A verbal profession is important, don’t get me wrong. A verbal profession is orthodox. It is an orthodox thing to do. It may be done fervently. You may profess in perfect orthodoxy that Jesus is Lord. You may profess it with great fervency that Jesus is Lord, you may profess it publicly that Jesus is Lord. You profess it in a spectacular way, calling others to saving knowledge of Christ, and still be professing Him falsely. For the Lord Jesus is saying that those who truly profess Him, are not simply those who profess Him verbally, but professed Him in their lives. He is looking not only for a verbal profession, He is looking for a moral profession. He is looking for a change of character. Our saying and our doing must go together, because grace changes our hearts and lives. Grace not only saves us from the penalty of sin, it changes our hearts and lives.

And so the apostle Paul can say in II Timothy chapter 2, verse 19, let everyone who names the name of the Lord depart from iniquity, because grace changes our lives. Jesus, in verses 22 and 23, issues a terrifying promise. He says that there are going to be people in the last day, who claim to have prophesied in His name, who have cast out demons in His name, to perform miracles in His name, and they are going to say, Lord, Lord, we did all these things in Your name, and He is going to say to them, these terrifying words: I never knew you. Depart from Me, you who practice lawlessness. See what Jesus is saying? He is saying the reason that He will reject them is because their lives did not reflect the reality of the grace of the gospel. They did extraordinary things. He doesn’t argue with them about that. Maybe you did, but your lives weren’t changed by the grace of the gospel. Depart from Me, you who practice lawlessness. Your lives contradict your claim to be my disciples.”

J. Ligon Duncan, First Presbyterian Church, Jackson, MS