Mudita is translated as gladness in the Divine Abidings chant, but the term commonly used is sympathetic joy.
Mudita is characterized as a gladdening at others’ success, a delighting in the success, the goodness, and the well being of others. Its function is being unenvious, not being jealous of the good fortune of others.
Most of us, I think, find loving- kindness and compassion beneficial and good to practice. When it comes to sympathetic joy, we do not think too much about it and tend to dismiss it as either abstruse or unreal. When you start watching your mind, however, you see the pettiness over and over again. The unwillingness to rejoice when someone does something good is seen in the snappy remark or the clever little synopsis of a person or situation, which are a part of daily life in our interrelations with people but which tend to be based in negativity or cynicism. Such responses do not come from a place of gladness but very much from a sense of self. One attempts to lift oneself up by putting down someone else.
By cultivating mudita, the sense of self is undermined. There is a letting go of the attachment or fixation to self. This enables us to delight in the well being and good fortune of those around us. A great deal of joy is generated when one is able to tap into this quality. Mudita is manifested as non-aversion, and its proximate cause is seeing the success of others. It succeeds when it causes a sense of coolness of the heart, an acceptance. It fails when it causes merriment, a frivolous delighting in things that agitate the mind, which is not a pure-hearted delight.
This reflection by Luang Por Pasanno is from Sublime Abiding Places for the Heart, (pdf) pp. 18-19.