1-2 No one who is emasculated or has his male organ cut off may enter the assembly of the  Lord. No one of illegitimate birth may enter the assembly of the Lord. Even to his tenth generation no one related to him may enter the assembly of the Lord. 3-4  No Ammonite or Moabite may enter the assembly of the Lord. Even to their tenth generation they may not enter the assembly of the Lord  forever, because they refused you bread and water on the way, when you came from out of Egypt and because they hired Balaam, the son of Beor of Pethor of Mesopotamia, against you to curse you.  5 Nevertheless, the Lord  your God would not listen to Balaam. Instead the Lord your God turned the curse into a blessing on you because the  Lord your God loves you. 6 You are not ever to seek their peace nor their prosperity all your days.

7-8 You are not to abhor an Edomite, for he is your brother. You shall not abhor an Egyptian, because you were a foreigner in his land. The children who are born of them may enter the assembly of the Lord in their third generation. Deuteronomy 23:1-8 Modern English Version

People who did not grow up in Church circles may be surprised, even puzzled, to find verses like these in the Bible. It may even apply to some who did. Part of the reason is because they will have heard how the New Testament tells us that God's mercy is wide and His love is deep. But what we probably have in these verses is God teaching the Israelites that He is not only a God of compassion, He is also a God who is holy and His holiness is perfect. One of the ways of doing that was by saying that some things just don't mix.

Verses 1-2, for example, picture a physical and a moral disqualification that would remind them that imperfection and perfection are not compatible. Years later though, in Isaiah 56:4, God says: “I will bless the eunuchs who keep my Sabbath days holy and choose to do what pleases me and commit their lives to me.” So I think the separation taught by Moses in Israel's early days was intended more to keep them from assuming it was a light matter to come into God's presence.

Verses 3-4 are a much more serious situation, especially because of what God says in vs 6. Why were Israel NEVER to form any alliance with Ammonites or Moabites?

The Ammonites were essentially a Satan worshipping people whose disgusting practices were the reason God used Israel to drive them out of the land. God had given them over 400 years to repent and change their ways, but they had never done so. In the case of the Moabites, they had tried to get a prophet named Balaam to bring a curse on the Israelites as they journeyed to the land God was giving them. The Old Testament devotes 5 chapters to that incident so it was a crucial time for God's people when Satan was doing his utmost to wipe them out. You can't make alliances with the Devil or the Devil's followers! But what is the encouraging picture that comes out of vs 5?

Not only did God not allow Balaam to curse Israel, He actually made Balaam speak only of blessings that He would give to them. When people intend evil for those who love God, He is able to make it work out for their good. The events of Calvary are the supreme example of that.

The people of Edom (vs 7-8) didn't actually attack Israel on their journey but they also didn't allow them to take a shorter route through their land. But because they were descendants of Esau, the brother of Jacob from whom Israel descended, God was less severe on them. So too with the Egyptians. Although they eventually made slaves of the Israelites, they had originally given refuge to them in the days of Jacob's son, Joseph. Once again, though, a time limit was set before Edomites and Egyptians could become full members of Israel.

What a difference this all is to the gospel. Having taught the world (through the laws He gave Israel) that He is a God who is so perfect in holiness that we can't waltz into His presence with all the imperfections of our backgrounds and sins, God then displayed His amazing grace in providing a sacrifice that would blot out the record of those sins and remove the barriers of His law. Jesus Christ makes people who were not fit for God's company perfectly presentable to Him! Sin and God can never mix. But the blood Jesus shed cleanses everyone who has faith Him.