At the time when Patrick Henry delivered this passionate speech, the colonies were in constant and growing conflict with Britain. In reply, rumors circulated that Britain was planning some form of reconciliation with the colonies, and many people were swayed to hope for a renewed alliance. Henry asserted that Britain would never be moved to protect the interests of the colonies and that war was both imminent and necessary.

In this speech, Henry rallied those in attendance to pursue a nation based on freedom and liberty. In this quote, Henry boldly asserts that he would rather die than to remain under British rule, subject to their ongoing efforts to reverse colonial resistance through efforts such as the Coercive Acts. Henry states that regardless of what other colonists may feel or what actions they might take, he will relentlessly fight for freedom and liberty.

Though some doubt that Henry spoke these words, it was just after this passionate speech, given without notes, that "the shot heard round he world" launched the series of events that would culminate in the Revolutionary War. Many colonials embroidered the words "Liberty or Death" onto their shirts and rushed to join their local militias in the spirit of Patrick Henry's bold speech.

This quote is most frequently attributed to the Founding Father Patrick Henry, who gave the platitude that a life without complete and absolute freedom is not a life worth living. He remarks that life is not such a wondrous thing that one should live in metaphorical or literal bondage just for the sake of staying alive or maintaining peace. In his fiery oratory style, he beseeches God to forbid such foolishness. Speaking only for himself, he asks to be given a life of complete freedom or no life at all.

This speech, or one similar to it, was given at the Second Virginia Convention. It was at this meeting that it was decided that the colonies should begin taking measures to defend themselves and that war with the British was inevitable.

What this passage, attributed to Patrick Henry (though there is serious doubt as to whether these are the actual words he spoke), means is that Henry would prefer to die rather than to live without liberrty.

To understand the meaning of the passage you give, you must first understand what Henry wants God to "forbid."  What he is saying is that he wants God to forbid that he and others would rather have peaceful lives without liberty.  He asks

Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery?

Henry then goes on to speak the lines you cite.  He is essentially saying that other people might be okay with a peaceful life without liberty, but he himself would not be.  If he cannot be free, he would rather die.