I think the first thing we must understand is the depravity of man. We are not good people. I saw you said there are so many "good people." But Jesus said no one is good, no one but God. Jer. 17:9 says our hearts are deceitful and wicked. God doesn't see His creation as good people. He sees us as sinful, unholy, undeserving human beings that have chosen to go their own way... without Him. He chose to save some to be with Him when they die. That's a merciful God. I'd recommend reading the book, "The Holiness of God" by R.C. Sproul. That might help some. If we understand how sinful our sin is and how holy God is, then it makes sense that He will throw people into the lake of fire and why we all deserve it, even the nicest of people like little old ladies.