When you read 1 John 1:8, you also have to read 1 John 2:1 where John says, "sin not." You also have to read 1 John 2:4 that says,
"He that saith, I know him, and keepeth not his commandments, is a liar, and the truth is not in him."
Now, let me ask you a question. If you are breaking even of his commands, is the truth in you (according to the verse above)?
In John's 1st epistle, he was writing to the brethren in regards to those who were trying to deceive them (See 1 John 2:26). We also learn that 1 John 1:6 says the same thing that 1 John 2:4 does. It says he that says he has fellowship with him and walks in darkness lies and does not the truth. So then, we realize 1 John 1:8 is a warning to the brethren against those false believers who claim they have no sin. Sort of like the OSAS proponent today says a similar thing. Yes, they will admit they sin physically, but John is not referring to the natural world in his epistle.
In fact, the OSAS proponent today says their sin on a spiritual level does not exist for them because it has been forgiven (Past, present, and future). The OSAS proponent also says 1 John 1:9 does not apply to forgiveness of sin in relation to salvation, either. Yet, the true believer admits their sin and knows they are forgiven of sin if they confess it. The true believer does not ignore sin if it arises in their life (Because they confess it so as to be forgiven).
No, I love 1 John 1:8. It actually exposes the false gnostic beliefs of today like OSAS.