“There will come a time when the mountains collapse, and when all the stones at the bottom of the sea are dry, and all the raindrops have washed the earth away. It is possible to conceive of an elephant or a camel entering into a needle’s eye, or of counting all the raindrops. But there is no conceiving of a time for hope in Hell.” ( –Faust Book, Ch XI)
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. Instead of the joy of salvation, damnation sends the deceased to punishment in Hell – for eternity.
The threat of damnation encourages Christians to live sinless lives, and to confess and seek forgiveness for the sins they have committed.
Damnation can mean being sent to Hell to suffer torments for eternity; it can mean also 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 or withholding salvation.
What do the strong need of religion? “Faust” translates into “Fist” in German, and “Lucky” in Latin.
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.