The following is from the Ignatius Catholic Study Bible: The Gospel of Luke by Scott Hahn and Curtis Mitch:
Full of grace: This is the only biblical instance where an angel addresses someone by a title instead of a personal name. Two considerations help to clarify its meaning. (1) The expression full of grace is rooted in Catholic tradition and traced to St. Jerome’s translation of this verse in the Latin Vulgate. Although fundamentally accurate, it lacks some of the depth of the Greek original. Luke could have described her with the words full of grace (Gk. pleres charitos) as he did of Stephen in Acts 6:8, yet here he uses a different expression (Gk. kecharitomene) that is even more revealing than the traditional rendering. It indicates that God has already “graced” Mary previous to this point, making her a vessel who “has been” and “is now” filled with divine life. (2) Alternate translations like “favored one” or “highly favored” are possible but inadequate. Because of the unparalleled role that Mary accepts at this turning point in salvation history, the best translation is the most exalted one. For God endowed Mary with an abundance of grace to prepare her for the vocation of divine motherhood and to make her a sterling example of Christian holiness (CCC 490-93, 722).
- Gabriel’s declaration points in the direction of Mary’s Immaculate Conception. According to Pope Pius IX’s 1854 definition Ineffabilis Deus, Luke’s Annunciation narrative is an important indicator of Mary’s lifelong holiness. God is her “Savior” (1:47) in the most perfect way possible: he sanctified Mary in the first instance of her conception and preserved her entirely from sin and even from the inclination toward sin that we experience.
So, in short, “highly favored” or “highly favored one” is technically a correct translation, but loses some important subtleties of the meaning of the original translation, which is why “full of grace” is better (though still not absolutely perfect).