Holy refers to being separate, it means to be different. I have tried to explain this to people a lot of time but an average Christian has abused the word too much for them to understand the original meaning of the word. Assuming everybody has a white car in a gathering and a fellow has a black one, the black car is the holy car among them if the judgment were to be based on colour alone. When the bible says believers should be holy, it means we should be different from those that are not believers and it is usually used in that case to address the conduct of a believer but that is not the only meaning it has. In this sense; it means to be conformed completely to God’s plan for man and that goes beyond conduct alone, it addresses our nature and relationship with God. It points to righteousness:which means to be faultless in the presence of God; to be accepted completely by God. This is what God has planned for man before the founding of the world and he planned to achieve it in and through Christ.
According as he hath chosen us in him before the foundation of the world, that we should be holy and without blame before him in love.
When you consider the expression Paul used “holy and blameless”, you will find a similarity between this and the one he said earlier in verse 3 “God and father of our lord Jesus Christ”. Hence, holy and blameless in this case actually mean the same thing. As a matter of fact, he added blameless to explain what he meant by holy. Therefore, that part would be better if it had read “holy that is, blameless before him in love”.
After man had committed the unthinkable, humanity became separated from God and God having a foreknowledge of this had planned on how He would restore man back into relationship with Himself.
God knew that it would be impossible to restore man back into relationship with Him as long as sin still remained an issue. Hence, God decided to settle the sin of man thereby making him holy in His sight. (Hebrew 10:10)
This also tells us about the state of believers, since they are the fulfillment of God’s plan. Today believers are holy before God– they are accepted before the Father as faultless.