In practice, the doctrine seems to be interpreted this way: "Whoever condemns what I do not condemn is condemned by this verse. (Oh, and by the way, whoever doesn't condemn what I condemn is condemned by otherverses.)"
The rub, of course, is what to make of this teaching in light of the fact that there's plenty of obvious sinning going on around us. The Fathers came up with a variety of interpretations: categorically forgive the sins committed against you; don't condemn others guilty of lesser sins than you have committed; don't judge men lest the habit lead you to judge God; always put the best possible interpretation on actions.
Let me draw attention to St. John Chrysostom's comment (as quoted in the Catena Aurea):
He does not say, "Do not cause a sinner to cease," but do not judge; that is, be not a bitter judge; correct him indeed, but not as an enemy seeking revenge, but as a physician applying a remedy.
A judge and a doctor both are to evaluate evidence, allow for uncertainty, reach a conclusion, and instruct others to act accordingly. The key difference is that the judge acts for purposes of justice, while the doctor acts for purposes of health.*
Our God, we know, is a God of Justice and a God of Mercy. How Justice and Mercy embrace within God is a mystery, but perhaps Jesus is teaching us that whether we experience His Presence as a presence of Justice or as a Presence of Mercy depends on how others experience our own presence.
* It's probably worth pointing out that I can act as a judge all I want, but I have no authority to insist my judgments are carried out. Quite apart from Christian doctrine, it's silly for me to play judge. (The situation's more complicated for those who actually do have authority to judge, which is yet another reason to pray daily for our bishops.)
At the same time, I'm not particularly qualified to prescribe spiritual medicine in most cases. I recommend "prayer and fasting" more as nutrition than medicine for the spiritual life and encourage those in need to seek the guidance of those holy, wise, and gifted in these matters. Hence "medic," rather than "doctor," in this post's title.