"Ode on a Grecian Urn" by John Keats is actually a poem about the Parthenon frieze, which had been brought to England by Lord Elgin and was on display in the British Museum.
The central theme of the poem is that the marble characters carved on the Parthenon frieze are forever caught in a single frozen moment of time. The procession will never reach the altar and the heifer will never be sacrificed. Although the sculpture captures movement and action, in fact, no action can ever take place because time is frozen.
The image of love which is never consummated and a beloved who never ages is an ideal Romantic vision of a perfection that can only occur in the world of art, which stands apart from the ever-changing and imperfect world of reality. This relates to the last line in the sense of evoking beauty and truth as eternal and identical, in a strongly Platonic vision.
In "Ode on a Grecian Urn," the poet gazes at the picture on an urn from ancient Greece. (If you google "Ode on a Grecian Urn" and "images" you can see Keats's sketch of this urn.)
The scene depicted, of young people flooding out of a Greek town to go to the countryside for a pagan festival, playing musical instruments, singing, leading heifers and generally being happy and joyful, mesmerizes the poet, who enters imaginatively into the moment, as if he himself has walked into the scene.
This leads to the line you quoted, "forever will thou love and she be fair," and the poem's theme. On the urn, the narrator sees two young lovers just about to kiss. This, and the scene in general, throws him into ecstasies, as suggested by all the exclamation points that start emerging in the poem. In fact, the couplet that this line is part of ends in an exclamation point:
She cannot fade, though thou hast not thy bliss,
forever will thou love and she be fair!
The poet at this point is addressing the young man on the urn who is just about to kiss his girlfriend. The girlfriend, because she is a painted figure, "cannot fade." In other words, she can't grow old and die. So even though the young man can't have his "bliss," in other words, can't kiss his beloved, he will be in love with her forever and she will always be young and beautiful. The poet thinks this is fabulous!
That line expresses the poem's central theme: is it better to be a figure on a work of art, ever frozen in time, saved from death, but after all frozen in one instant, or a human, subject to aging, unhappiness and dying? The poet argues that it is better to be a work of art, saying to the urn (a work of art) near the end:
When old age shall this generation waste,Thou shalt remain, in midst of other woeThan ours, a friend to man
At this point in the poem, the poet very much comes down on the side of art. He is completely swept up in the raptures of how wonderful it is to be painted on an urn, forever young and happy. In fact, in the next stanza, his joy overflows and there are few writers who express pleasure in art's immortality more ecstatically: he repeats the word happy five times with three exclamation points! He addresses the "happy, happy boughs!" (happy because they will never shed their green leaves) and then returns to the young lovers: "more happy love! More happy, happy love! ... For ever panting, and forever young ..." The idea of being forever young and happy really, really captures his imagination and floods him with joy. He can't contain his emotions: "happy ... happy, happy!"
At the end of the poem,the narrator comes out of his ecstatic reveries but is left with the conviction that the immortality that art offers is a wonderful thing, a "friend to man."