The history of this sacrament is long and complex. It begins, of course, with Jesus Christ. Christ gave power to the holy apostles to bind and loose sins. Sin is traditionally defined as "disobedience" or alienation from God which causes us to hate ourselves and be distant from others.
If we confess our sins, God is always ready to forgive us, just as the father did the prodigal son. Christian confession and even confession in the Old Testament was always public confession. There was no notion that confession be other than a public one. Over the years, it evolved into a "private" confession where Christians would reveal their sins to a priest. It is the practice of the Armenian Church to endorse both private and public forms of confession. The more practiced is the public one where those ready to take communion first step forward and confess their sins as a group ("megha Asdoodzoh"... I have sinned against God...).
The present form of confession is a shortened version of St. Ephraim the Syrian's 10 confessional statements. It was originally introduced into the Armenian Church by St. Gregory the Illuminator and translated from the Syriac by Sts. Mesrob and Sahag.
It is through this sacrament of healing that humankind is restored and reconciled with God. But of course, forgiveness can only become complete and genuine when we ourselves are forgiving.