The verse from the revelations of Joseph Smith is:
Doctrine and Covenants 93:29
29 Man was also in the beginning with God. Intelligence, or the light of truth, was not created or made, neither indeed can be.
As a member of The Church of Jesus Christ of Latter-day Saints, we believe that man preexisted this earth life and our spirits were the offspring of God. As his offspring we received a spirit body but before that, we were self existing beings known as an intelligence. So we believe that mankind has always existed as an intelligence but that we, through the process of procreation became the offspring of God or his spirit children. Later we came to this earth as the posterity of Adam and Eve. Because of our self-existent nature, God could never have created our intelligence. God, knowing we have a self existent base existence knew that for us to progress, we needed to learn to become like him and not simply be made like him. For this reason, God has allowed us to come to a fallen world as mortals for a temporary amount of time in order to learn good from evil and to test us to see if we would choose good over evil and remain good beings. He knew that we were not perfect and that we would make mistakes along the path of progression. For this reason he called and chose a Savior from before the foundation of the earth so that we might have a chance to repent and forsake our sins and gain forgiveness and return unto God after this mortal probation.
The knowledge that God could not create us to be perfect due to our self-existent nature gives us more understanding why God has placed our immortal spirits in the situation we are in to learn to become more like himself. Nobody forces God to be the person he is and for us to become like him, God also gives us free will to choose just as He himself has. We need to learn to choose in and of ourselves to be good beings and thus we are placed in a situation to learn and experience good and evil and have the free will to choose good over evil. Only those who choose to become like God are allowed into the highest kingdom, ie the kingdom of heaven, to live again in the presence of God forever and ever. Those who fail to repent and become good beings will inherit inferior kingdoms that are ruled over by those who inherit the kingdom of heaven. God loves his children and has given each of the opportunity to make a free choice to become like him and inherit the kingdom of heaven. In our premortal existence, we all freely chose to come to this earth and experience mortality and learn good and evil. Unfortunately many of us fail to choose good over evil and may not return to the highest kingdom. But all of us will receive resurrection an immortality and continue living for ever and ever in bodies of flesh and bones. Those who come to this earth life and do not have the opportunity to hear the gospel of Jesus Christ will be given that opportunity in the world of spirits after mortality and thus all mankind will have the chance to accept or reject the Lord's gospel. This will occur before the resurrection and judgement. So all mankind will have the opportunity to accept the gospel and the chance to enter the kingdom of heaven. So what it all really comes down to is what we will do with our free will. Will we learn to repent and do good or will we continue in our sins and disregard Jesus and his gospel?
This is how we who are members of The Church of Jesus Christ of Latter-day Saints view our eternal progression. The law of justice says that we have all sinned and fallen short of the glory of God. But God has made it so we can change our behavior and repent and find forgiveness of our sins and escape the demands of justice. This is possible because a being who was perfectly innocent, who was a lamb with blemish and spot was willing to place himself on earth and suffer the wrath of the devil and wicked men. The persecution and suffering that He suffered was unjust because he never sinned and lived a life without offending God our Father in the least. The Father knew that this unjust suffering of his Firstborn Son in the spirit and His Only Begotten Son in the flesh would not only deserve a recompense but also deserve a recompense to the extent of his suffering. Because Jesus took upon himself the suffering of all mankind, he was granted the recompense of the power to forgive all mankind upon the principle of repentance. Without this atoning sacrifice mankind would be lost to the law of justice and not one would ever make it back into the presence of God our loving Eternal Father in Heaven. But God is an all just being and an all merciful being to those who repent and truly become good beings. Only to those who repent is God justified in granting them reentrance into his glorious kingdom. Those who do not repent will find themselves in lower kingdoms of glory but to those who become the Sons of Perdition, they will end up in a kingdom without glory known as Outer Darkness. He will eventually judge us on what we chose with our free will and whether we chose to be good beings or not. His judgment is just and his mercy is just. It is up to us individually to choose our future lives in the hereafter.