The first answer generally used is, "But God has to be just! Even though He loves everyone, His justice demands that He sends those who do not believe to Hell." However, this falls a bit short. It is true that the sins of men are grave. God is holy, and all offenses against Him are truly terrible. When He loves, people hate. When He rules, people rebel. When He speaks, people refuse to listen. Yet He is God. So man's sin does deserve condemnation. Still, there are problems with this answer. First, I do not think it wise to put God at conflict with Himself. It is not as though God has two hearts, one of justice trying to punish the sinner and one of love trying to save everyone. Jesus Himself said that a house divided against itself cannot stand! Second, could God not have found a way to reconcile everyone under the Cross? I mean, He is God! He is omnipotent! He is infinitely wise and sovereign! Surely if He chose He could work out a plan that would save everyone, right?
Now let me be clear. It is justice by which God condemns. God does indeed send people to Hell (contrary to the claims of some) just as a judge sends men to prison. On Judgment Day, God will not simply say, "I do not choose you for salvation. Off to Hell with you!" Instead, He will look at their works, see their utter sinfulness, see their unbelief, and condemn them because of it all (Rev. 20:11-15).
This being said, the question remains: why not bring Christ's atonement to all men? Why not save everyone from Hell? The answer lies in understanding a key concept: God's glory is man's grace. What do I mean? God designed us for Him. This is evident from the Scriptures. Hebrews says that God has written eternity in the hearts of all men. The Bible frequently connects rejoicing and happiness with God's praise and glorifying Him. The history of idolatry in the world shows that all men have a need for the glory of God, even if they rebel against God because of His holy standard. There is simply abundant Biblical reason to believe that, whenever God gets glory, man gets grace. God's happiness is also happiness for those who love Him. When you delight in God, He becomes a source of happiness in your heart. So when He is exalted and your vision of Him expands, that source overflows.
This is all to say that the good of humanity is tied to the glory of God. Thus for God to maximize good for man, He must maximize His glory. Hell is one way of doing that. How? Basically, the Cross is the major highlight of God's love, though it also shows His justice. To maximize the glory of justice as well, Hell is there. Instead of atoning for the sins of all mankind finally and completely on the Cross, some are left to pay their own debts. They cannot. Because of this, they go to Hell. And when this happens, God is vindicated. At the end of time, when we are glorified and judgment begins, God's people will rejoice to see Him paying back sinners for sinning against Him. Just as a crowd of loyal subjects would rejoice to see their King punish insurrectionists, and as a man's many children would rejoice to see their father beat the bad guys who killed their brother, believers will rejoice to see God defeat those who would defy Him once and for all.
God's goal is not a uniform, but lesser, share of love and joy for all humanity for all eternity. By condemning sinners, even though the suffering increases for them, the joy increases even more so for those He loves even more, His own people. Hell deepens the redeemed's understanding of grace, and of the love God has for them. Instead of just knowing that God had saved them from something which no one will ever experience anyway, they will know that God has saved them from a very real danger which they could easily have ended in themselves. Their more full vision of God, with His love on display fully and His justice on display fully, will bring them tons more joy than a lopsided view that is all love and only hardly justice.
In the end, I believe that God is building the best of all possible worlds, which is the ultimate expression of love. Instead of a world that just looks like a white sheet, God's world is like a marvelous painting of many hues and variations in light. Some parts are black and red and even ugly up close, but the artwork as a whole is more beautiful than anything else ever could be. Glory and grace will be maximized beyond what they possibly could be if everyone got to go to Heaven. When judgment has ended, the lost will be forgotten as the redeemed being their infinite journey of joy in Christ, ever expanding and increasing. And yes, I realize that this can be a bit hard to swallow. Our love is so simple, with no room for pain, that God bewilders us. But God tells us always to trust Him, and to have faith that He is good. And He assures us with these words:
"For My thoughts are not your thoughts,
Nor are your ways My ways," declares the Lord.
"For as the heavens are higher than the earth,
So are My ways higher than your ways
And My thoughts than your thoughts.
(Isaiah 55:8, 9 NASB)