As usual, in this passage Kant is solving several problems at once. Does God exist? Is God good? Is Christian morality rational? Can Euthyphro’s dilemma be overcome while retaining the God and morality articulated by Christianity?
Based on what we have already read of Kant, we should assume that he would reject the idea that we have access to knowledge about the existence of God (since God cannot be positioned in space and time). Kant argues instead that reason requires hope (faith, if you will) in the existence of God. To understand this we have to take a couple steps backwards. We must understand his ethics.
Kant’s epistemology, which we have focused on, is addressed in Critique of Pure Reason. Pure reason gives one knowledge about that which is known a priori (without experience). In contrast, Kant’s morality is addressed in Critique of Practical Reason. Practical reason gives one a posteriori (with experience) knowledge. Morality cannot be understood based on reason alone. One must experience living in society before one can discover the objective moral truths implicit in our rational world.
We learn from experience and rational deduction that rational (moral) behavior requires everyone to act in a rationally consistent way, and if everyone were to behave rationally, everyone would have the greatest possibility for happiness. When one behaves selfishly, he or she is behaving irrationally. The idea is that in a world in which everyone behaved in the same immoral way would be logically impossible. For example, if everyone lied, no one would trust anyone, and society would collapse.
Additionally, in order to be truly moral, one must act rationally (morally) out of duty, emotionally detached duty, not out of a desire for happiness. We will be frustrated and fail if we seek after happiness. In our world happiness cannot be guaranteed. It can only be a fortunate by-product of a rational world created by a rational (moral) God. God created the rational world in the way that He did in order for humans to fulfill the greatest good, which is a rational world in which everyone has the greatest opportunity for happiness. Since reason cannot guarantee that God exists, we are obligated to hope (have faith) that He does exist, enabling us, with our hope of eternal happiness, to persevere, to fulfill our duty to moral behavior.