In Christianity there is no cycle of reincarnation, and no chance for improvement or karmic redress in another life. Once one dies, the soul returns to God for judgement.
If God determines that the deceased person has sinned beyond redemption, or has had insufficient faith, then he is damned. As well as not being the joy of salvation, damnation sends the deceased to Hell – for eternity.
For the faithful Christian, damnation is the result of sinning. The threat of damnation encourages Christians to live sinless lives, and to seek forgiveness for the sins they have committed.
Damnation can mean being sent to Hell to suffer torments for eternity; it can mean simple destruction; or it can even mean sent out of the sight of God (and therefore sentenced to torment for being apart from God). Generally though, it is considered to mean banishment to Hell, there to suffer and burn in the eternal fires of Hell.
For Christians, going to Hell is the worst possible outcome, and as well as deterring them from sinning, it gives them comfort that those who have sinned against them will end up there. Because God knows everything, and is the perfect judge, justice will prevail, even if one has to wait until after death for it.
Friedrich Nietzsche said that Christianity was a slave religion – a religion for slaves – because it comforts the afflicted by offering hope and promising redress. In institutional hands, it pacifies the subject by offering salvation, and compels compliance by threatening damnation.
What do the strong need of religion?
Is Faust necessarily damned? If he has agreed to serve in Hell, then it is of his own free will. He may not truly be damned – simply not (yet) saved. His agreement isn’t God’s judgement, nor can it preclude God’s judgment anymore than any human can proclaim another “saved.” True salvation or damnation is given by God after death, and no human can know God’s will, though many think they can bend it. 
Faust is damned in the early sixteenth century stories, but those were superstitious and constrained times.
By the time of Goethe (the eighteenth century), the expansion of the philosophy of compassionate humanism (and the decline of the Church) changed attitudes and people felt that there had to be circumstances in which God would forgive a person for doing something offensive to Him that was motivated by love and compassion for others, supporting His own love for His people. This is partly how Goethe’s Faust is forgiven. Although tempted to turn away from God, Faust devoted himself to giving people a better life. With this rationalization humanists could justify themselves.