People could not sort the sin for themselves so God came, in human form (jesus/bethlehem) to pay for the sin himself. The payment is death. Jesus was separated from his Father when he died. (did time out for us instead) The temple curtain was ripped in two from top to bottom to show that the most holy place was now somewhere where we can go because God has paid for the sin. (Jesus/Easter story etc)
I don't believe in the "payment" theory myself, Susan. God is good, and would not ask anyone to be punished for something they did not do (even when that someone is God in another person).
I believe that Jesus came, and continues to come, to bring the Good News of God's all-forgiving love to everyone in the world. As you say - God's Holiness is so great that humankind cannot survive contact with it (even Moses, tho whom "God spoke as with a friend" was not allowed to look upon the face of God. I imagine that it is similar to looking at the sun - just too much for human eyes.
Yes - Jesus did die for our sins, in the sense that if humanity had not sinned, Jesus would not have needed to come in human form. Jesus' death was the result of people rejecting that message, and of jealous people wanting to hang on to power, forcing his death. Jesus was prepared to risk himself and to pay the ultimate price. He could have run away - lived out his life in obscurity somewhere. He was/is as human as anyone else - but he knew that to bing God's message he had to show that he totally trusted God, no matter what terrible things happened to him. And too he died publicly and horribly - and was resurrected three days later. (Lots of significance here, but too much for small children to take in.)
The temple curtain ripped to show that God had entered the world, and was no longer separate from humankind. We do not need a priest to communicate with God - we can have a personal relationship through Jesus Christ.
(Well, that's how I see it.)