This is one of those toughies among the theses. Here Luther puts forth the debating point that when the Pope proclaims God's forgiveness, it's true: he proclaims that God in Christ has forgiven the sins of the whole world.
Of course, it's not just the Pope who speaks that forgiveness: any priest who speaks the gospel to a sinner does the same thing.
38. Nevertheless, the remission and participation in the blessings of the Church which are granted by the pope are in no way to be despised, for they are, as I have said, the declaration of divine remission.
39. It is most difficult, even for the very keenest theologians, at one and the same time to commend to the people the abundance of pardons and the need of true contrition.