Augustine's career is divided into three main controversies 1. Manichean controversy, over the goodness of creation 2. Donatist controversy, over the reliability of the means of grace 3. the Pelagian controversy, over original sin and the sovereignty of divine grace.
In Augustine's formulations, there is an unfortunate contradiction which he never really resolved between his doctrine of the Church and his doctrine of grace. First, he claimed to the Donatists that where the Church and its sacraments were, there was a divine certainty of the presence of grace. Secondly, to Pelagius and his followers, he said that all humans lack the freedom to accept grace and that God's grace was sovereign in who he gave grace to. But if so, how is it that everyone who comes into contact with the means of grace are not saved? Also, if so, why do the sacraments and the Church matter?
One can go one of two ways on this. First, one can say that the external means of grace are irrelevant and that they only serve a purpose to confirm grace if you've already become aware that God has elected without means. This is highly problematic because it makes the means of grace unnecessary or perhaps necessary in a secondary sense. It also creates the question, how do I know that I have been elected if I receive such election apart from means?
The second solution is to say that the means of grace are effective to the extent that people accept them and that humans have free will to either accept or reject them. Hence they are efficacious as people want them to be. This again is problematic because it doesn't take original sin very seriously. It also takes away assurance, because one is instantaneously faced with the problem of how well they have performed the task of being properly receptive to the means of grace.
We can see where this went in western theology. Reformed thought went the former direction and Roman Catholicism went the other way. This wasn't just a development at the Reformation either. Going back to the first Eucharistic controversy during the Carolingen renaissance you have the beginning of both traditions.
How then does Luther over come the problem?
Solution is to accept that the event of proclamation of grace in Word and Sacrament are in fact identical with God's electing act. In other words, to be in contact with the means of grace is identical with being in contact with God's eternal act of election. To believe that the word is "pro me" then is to enter into that sphere where the divine will to elect works salvation. To be apart from it, is to be with the hidden God. The hidden God is in fact the price that we must pay for this. To collapse the temporal act of the giving of grace in Word and Sacrament into God's eternal act of election is to accept that God acts in a very different manner to those outside of that sphere. It is in fact to accept the inexplicable paradox that God is both serious about saving all and that he only elects a few.
The resolution is therefore not a resolution in the sense of tying up all lose ends. It is to resolve things in favor of the preached Word. At the same time it opens up the yawing abyss of the hidden God.