Kistemaker sums up this verse -  "Overcome evil with good".

Keep the context of this epistle in mind as you study "Walking by the Spirit" - This epistle to the Galatians is unlike most of Paul's other epistles because it lacks a commendation section and instead has a severe admonitory tone.  Many of the readers had obviously succumbed to the teaching of the Judaizers who taught that one must rigorously follow the Old Testament law in addition to Christ in order to be pleasing to God. These false teachers added that one must add circumcision and therefore in essence were teaching that one needed to add law to the grace of Christ which was not the true Gospel. The law was like a yoke which gives some guidance to an ox but which provides no power. And like a yoke, no external law can give one a desire to obey. And so Paul writes Galatians in an attempt to correct these heretical teachings which cut off those new converts who were "running well" in their Christian life.

Early in this epistle, Paul explained the necessary requirement for "walking by the Spirit", emphasizing that one must "begin" in the Spirit before "continuing" in the Spirit...

You foolish Galatians, who has bewitched you, before whose eyes Jesus Christ was publicly portrayed as crucified? This is the only thing I want to find out from you: did you receive the Spirit by the works of the Law or by the hearing of faith? Are you so foolish? Having begun by the Spirit are you now being (present tense) perfected (successfully completing, bringing to an end [we will never perfectly attain the goal of Christlikeness in this life but are to continue on this journey]) by the flesh? (Galatians 3:1-3)

Clearly Paul's rhetorical question demands a resounding "No". Spiritual maturity (or progressive sanctification, growth in Christlikeness, present tense salvation) is accomplished by the same faith that allowed them to begin in the Spirit. The problem in Galatia was that they had been bewitched and were foolishly seeking to "grow in grace" by keeping the law (see note Colossians 2:17). Now in Galatians 5:16 Paul proceeds to give the answer to how one attains true spiritual maturity, first by issuing a command, but adding a promise to that command.

But I say - In context of the previous passages, Paul has warned his readers of the danger of turning their freedom in Christ into a "license" to sin (v13).

For you were called to freedom, brethren; only do not turn your freedom into an opportunity for the flesh, but through love serve one another. (Galatians 5:13)

They might reason we are no longer under the heavy yoke of the Law but under grace (which is true). But then they would pervert the truth of their freedom in Christ. One must remember that the believer's new freedom in Christ is not freedom to sin but freedom from sin. There is a world of difference!  Paul says the rule of thumb that should guide their (and our) behavior in this new freedom in Christ is this...

"Do my thoughts, words and deeds genuinely demonstrate love to others? Am I loving others as I would love myself?"

For the whole Law is fulfilled in one word, in the statement, "YOU SHALL LOVE YOUR NEIGHBOR AS YOURSELF." (Galatians 5:14)

He warns them, that if they don't show love to one another, they will be biting and devouring one another and be in danger of destroying each other.

But if you bite and devour one another, take care lest you be consumed by one another. (Galatians 5:15)

Now in Galatians 5:16, Paul begins with a contrast word but, which signifies that instead of biting and devouring one another, by contrast, one needs to practice "preventative maintenance" so to speak by continually living the Christian life in the power of and under the influence of the indwelling Holy Spirit. Then, and only then, will one cease to gratify the desires of the flesh. It is the Spirit Alone Who can keep the believer truly free and allow him or her "through love to serve one another."

Illustration - Five-year-old Jason announced that he wanted to grow carrots in a corner of the garden. He dutifully watered his carrot patch, and his mom bought fertilizer. But no carrots emerged. As they puzzled over the absent carrots, his mom asked, “Jason, when did you put the seeds in?” “I forgot about seeds!” he exclaimed. “But–I thought if I watered and fed it right, the carrots could still grow!” Just as the ground doesn’t spontaneously produce carrots, our hearts cannot spontaneously produce obedience without fundamental change. (Today in the Word)

Barton adds that the phrase but I say...

...ties in with Gal 5:13-15. The strategy for removing the divisiveness that marred the Galatian church was to serve one another in love, but that too was humanly impossible. People cannot, in their own power, show love to all people at all times. But God has provided the means to meet his commands—the Holy Spirit. (Barton, B. B., et al. Life Application Bible Commentary. Romans: Tyndale House Publishers or Logos)

Richison agrees writing that...

In contrast to letting the flesh form a base of operations in our soul by devouring one another with words, we are to let the Holy Spirit control us. (Galatians 5:16)

Findlay writes that in context Paul has just explained the Galatian believers had been called to freedom and that they could keep from biting and devouring one another only as they learned to "walk in love" (see Gal 5:13,14, cf note Ephesians 5:2). He then explains how it is now possible to "walk in love" writing that...

LOVE is the guard of Christian freedom. The Holy Spirit is its Guide. These principles accomplish what the law could never do. It withheld liberty, and yet did not give purity. The Spirit of love and of sonship bestows both, establishing a happy, ordered freedom, the liberty of the sons of God.

From the first of these two factors of Christian ethics the Apostle passes in Galatians 5:16 to the second. He conducts us from the consequence to the cause, from the human aspect of spiritual freedom to the Divine. Love, he has said, fulfils all laws in one. It casts out evil from the heart; it stays the injurious hand and tongue; and makes it impossible for liberty to give the rein to any wanton or selfish impulse. But the law of love is no natural, automatic impulse. It is a Divine inspiration. ”Love is of God.” It is the characteristic “fruit of the Spirit” of adoption (see note Galatians 5:22), implanted and nourished from above. When I bid you “by love serve each other,” the Apostle says, I do not expect you to keep this law of yourselves, by force of native goodness: I know how contrary it is to your Galactic nature; “but I say, walk in the Spirit,” and this will be an easy yoke; to “fulfil the desire of the flesh” will then be for you a thing impossible. (Findlay, G G: The Expositor's Bible - Galatians - AGES Software)

Walk by the Spirit is translated variously as follows...

walk and live [habitually] in the [Holy] Spirit [responsive to and controlled and guided by the Spirit]; (Amplified)

 let your walk and conversation be dominated by the Spirit (Barclay)

let the Spirit direct your lives (Good News Bible)

Let your steps be guided by the Spirit (Montgomery)

Live by following the Spirit (NCV)

be guided by the Spirit (New Jerusalem Bible)

live according to your new life in the Holy Spirit. (NLT)

Live your whole life in the Spirit (Philips)

let the Spirit direct your lives (TEV)

obey only the Holy Spirit’s instructions. He will tell you where to go and what to do (TLB)

Let your lives be guided by the Spirit (Weymouth)

In the Spirit walk ye (Young's Literal)

Note some translations and commentaries do not take Spirit as the Holy Spirit but I think that is an incorrect interpretation. For example God's Word Translation is "Live your life as your spiritual nature directs you". Surely they mean to imply that the spiritual nature is that which is empowered by the Spirit, for otherwise we would have no ability to walk counter to the strong desires of the flesh.

Boice comments that...

Life by the Spirit is neither legalism nor license - nor a middle way between them. It is a life of faith and love that is above all of these false ways. (Ed note: Life in the Spirit is a brand new manner of supernatural living.)

Walk by the Spirit - Obviously this is not a literal walk (see more discussion below), but speaks of our day to day conduct. Walking was a common figure in the Old Testament for one's conduct ("How blessed is the man who does not walk in the counsel of the wicked..." Psalm 1:1). As Spurgeon notes "It is a rich sign of inward grace when the outward walk is changed, and when ungodliness is put far from our actions." (Ref) As we conduct ourselves each day, we are to do so by allowing the Spirit to guide, lead, control and empower our every thought, word and deed. This is vital for "victorious" Christian living. Positionally every believer is victorious because of Christ's work on Calvary and the truth that we are all in Him. But Paul desires that our daily practice match our secure, eternal position and that we daily live out what we really are - victors over sin, the flesh and the devil. Believers however cannot achieve victory over the flesh by adherence to a set of rules or by self effort, as many of those in Galatia were doing. To do so is like asking the flesh to cast out the flesh, something it will never do! To the contrary, just as we received Jesus by faith, we are charged to walk in His Spirit by faith. The same faith that saved us initially, now sanctifies us daily. Those variegated, manifold "pop tests" which God allows into our life each day will provide plenty of opportunities (not obstacles as we too often see them) to practice "walking" so that we might learn what it means to experientially and practically walk in the power of the Holy Spirit.

One aspect of walking in the Spirit is to have our daily lives under His control, and this in turn is optimized when we are in the Word of God daily and allowing His Word and Spirit to direct us throughout the day. Meditation is to the heart what digestion is to the body and thus is the taking in of the Word of God and making it a part of the inner being. As the heart and mind think on the Word all day long, the Spirit guides the life. This is what it means to walk in the Spirit.

C Norman Bartlett writes that in Galatians 5:16...

lies the key to conquest - not through the terrors of the law, but through the Spirit of the LORD will victory over the flesh be won. The spirit of the law and the law of the Spirit are poles apart. The injunction to walk in the Spirit implies power of choice on the part of the believer, whether to submit to the bondage of sin or to enter into that freedom in the Spirit which is rightfully his as a child of God. True, the old nature has not been eradicated, but its power over the soul which is trusting in Christ for salvation has been broken. Putting it figuratively, the dogs have been chained; they are no longer at large; but if we fail to keep our distance, and carelessly or deliberately give occasion to sin, we have ourselves to blame for the consequence. We have the privilege of walking in the Spirit; but we are not compelled to do so; it is a voluntary matter.

TRIUMPH OVER THE OLD NATURE...
NOT NEGATIVE REPRESSION
but
POSITIVE POSSESSION!

Approaching the subject from another angle, many a follower of Jesus fails of living a truly victorious life because he tries to study and prescribe for his own symptoms instead of giving the Holy Spirit the right-of-way in his life and letting Him minister as only He can in the treatment of hidden roots of moral and spiritual ailment. It is to be noted that in the main the way to triumph over the old nature is not so much a matter of negative repression as of positive possession of the boundless resources of grace available through the Spirit.

Thomas Chalmers once preached a sermon entitled "The Expulsive Power of a New Affection" (see Pdf with many pictures related to Chalmers - very interesting! The Expulsive Power of a New Affection on 1 John 2:15) and the reverberations of its challenging message still ring out. We turn the hose on dirt. We let in the pure air to drive out the foul. Tuberculosis is held at bay by a changing of climate. Need we enlarge at great length upon the application? There is no more effective way to fortify ourselves against the hurts of the flesh than to walk in the Spirit day by day and hour by hour. (C. Norman Bartlett: Galatians and You: Studies in the Epistle of Paul to the Galatians, 1948)

Andrew Murray gets right to the point observing that Paul's...

words suggest to us very clearly the difference, between the sickly and the healthy Christian life. In the former the Christian is content to 'live by the Spirit'. He is satisfied with knowing that he has the new life but be does not 'walk by the Spirit.' The true believer, on the contrary, is not content without having his whole walk and conversation in the power of the Spirit. He walks by the Spirit, and so does not fulfill the lusts of the flesh....

Wuest explains that...

Paul now introduces a statement intended to counteract the erroneous impression held by the Galatians, possibly at the suggestion of the Judaizers, that without the restraining influence of the law, they would fall into sin. Instead of an attempted law obedience in their own strength motivated by the terrors of the law, Paul admonishes them to continue to govern their lives by the inward impulses of the Holy Spirit. The type of life and the method of living that life which he here speaks of, Paul had already commended to them in Gal 5:5, in the words “For we through the Spirit wait for the hope of righteousness.” Thus, the secret of victory over sin is found, not in attempted obedience to a law that has been abrogated, but if subjection to a divine Person, the Holy Spirit, Who at the moment the sinner places his faith in the Lord Jesus, takes up His permanent residence in his being for the purpose of ministering to his spiritual needs. (Wuest, K. S. Wuest's Word Studies from the Greek New Testament: Eerdmans or Logos)

Richison explains walking in the Spirit as follows...

We as Christians do not measure up spirituality by how much prayer, witnessing or service we do but by dependence on the Spirit. We cannot live the Spirit filled life by suppression of sin or by eradicating sin but by the counteracting power of being filled with the Spirit, walking in the Spirit. Victory does not come by self but by the Spirit. When we walk in the Spirit, we are spiritual and produce the fruit of the Spirit. The fruit of the Spirit comes from the Holy Spirit, not from our deeds lived in the power of self (see notes Ephesians 3:16;5:18).

Walking presumes activity; it is not a defensive stand. We enter actively into God’s will by resting in the power of the Holy Spirit. We rest in His sufficiency. The Christian does not attempt to walk; he walks. He maintains a manner of reliance on the Holy Spirit. He lives daily to the glory of God.

A physical walk is an incipient fall. With each step we fall until our other foot catches the fall. Thus walk in the Spirit is dependence for it is a repeated succession of faith steps. Learning to walk in the Spirit should be as common a function as learning to walk physically. (Galatians 5:16)

Steve Zeisler has some very pithy but practical exhortational comments on what it means to walk in the Spirit noting first that it...

is not referring here to the high moments of our Christian life or to emotionally charged circumstances: taking communion in a candle lit room, praying for hours over some critical decision, etc. He is not talking about serious Bible study, about evangelistic enterprises, about the times when we are quite obviously interested in and concerned with the things of God. He is referring to our walk, the everyday experience of putting one foot in front of the other, the morning to night, inhale-exhale, normal process of living life.

Walk by the Spirit is the command.

Don't bypass today's seemingly mundane circumstances.

Take time to listen to the Lord in today's business.

Be willing to judge the double standards that are so frequently ours, where we expect others to live under stricter standards than we ask of ourselves.

Allow the Lord to have access to the tone of voice you use when you speak to people: judge the little prejudices you have carried around with you all of your life.

That is what this command is referring to: all of these ordinary things, the daily course of events.

Walk by the Spirit, so that when momentous occasions come, or great difficulties arise, when our walk leads us into the "valley of the shadow of death," even--then we are ready to face whatever comes. The choices we make all along to walk in this way have prepared us for the worst the flesh can do to win us to its desire. (Fight the Good Fight)

THE COMMAND:
WALK

Walk (4043) (peripateo from peri = about, around + pateo = walk, tread) means literally to walk around, to go here and there in walking, to tread all around.  The  39 uses in the Gospels always refer to literal, physical walking. Seven of the 8 uses in Acts are also in the literal sense (except Acts 21:21). In contrast, Paul uses peripateo only in the metaphorical sense (32 times) meaning to conduct one's life, to order one's behavior, to behave,  to make one's way, to make due use of opportunities, to live or pass one’s life (with a connotation of spending some time in a place).

Here in Galatians 5:16 Paul uses the present imperative which is a command to habitually walk or conduct your life by the Spirit. Paul's use of the present (continuous) tense also implies that believers have a continual need to walk in the Spirit. The fact that it is an imperative or command, indicates the necessity of believers to make a choice to obey. The metaphor of a walk merely consists of two simple steps, repeated over and over again and thus Paul is not commanding a complicated exercise but a necessary thing in order to be able to resist to pull of the flesh toward legalism (in the context of Galatians).  Note that to walk by the Spirit is what we do when the holy desires produced by the Spirit are stronger than the desires produced by the fallen flesh. It follows that walking by the Spirit is not something we do in order to get the Spirit’s help, but rather it is something we do by the enablement of the Spirit. Note also that any good, godly and holy desire we have is a reflection of the effect of the Holy Spirit, because apart from the Spirit we are mere flesh and as Paul said in our flesh, there dwells no good thing. It is painful to realize that apart from the grace imparted by the indwelling Spirit, none of our inclinations or desires are holy and good. Paul makes that clear in Romans 8 writing that...

the mind set on the flesh is hostile toward God; for it does not subject itself to the law of God, for it is not even able to do so (see note Romans 8:7) (Comment: This verse primarily describes the unregenerate but it also describes what the flesh that still resides in a believer is capable of doing!)

When we were born again the Holy Spirit took up residence in our physical bodies and imparted an entirely new array of desires, yearnings and longings. It is when these desires are stronger than the opposing desires of the flesh, that we are walking by the Spirit. Why is this true? Because we act or "walk" according to our strongest desires. Compare the OT explanation of the effect of the Spirit's coming to indwell believers in Ezekiel 36, where God promises (to Israel but applicable to all Gentiles who are "grafted in" and become partakers with believing Jews of the rich root of the olive tree)...

I will put My Spirit within you and cause you to walk in My statutes, and you will be careful to observe My ordinances. (Ezekiel 36:27)

Notice what the role of the Holy Spirit is in every believer -- He produces strong desires in us that are according to God's will and which enable us to walk in God's statutes. God does this without making us robots, for He goes on to declare that we have a choice, a choice to be careful and to observe His ordinances. When we are careful and we choose God's way, we are walking in the Spirit and are fulfilling this OT prophecy! But we must not lose sight of the balance in this verse. We walk in the Spirit because the Spirit is in us, giving us the desire to walk that holy path, rather than the path of fleshly independence. As every believer is so painfully aware, we can still choose to walk the latter path but when we do, we are countering the urges and desires of the Spirit and this creates an internal struggle that is "uncomfortable" and lacks the internal peace of God (see notes Galatians 5:17). On the other hand Paul explains that "the mind set on the Spirit is life and peace" (see note Romans 8:6)

Rob Morgan illustrates what Paul is not saying in Galatians 5:16...

I had a professor once, Otis Braswell, who talked about this verse one day in class, and he made an interesting comment. He said that many Christians read this verse backward. They think that if they are not fulfilling the lust of the flesh, they can walk in the Spirit. And so they try with all their might to overcome their addictions and lusts, and they try to do it in their own energy. They turn over a new leaf. They make a new resolution.

But we can never overcome our besetting sins by ourselves. We must come in full surrender to Jesus Christ, confessing our sins, and yielding ourselves to Him so that by His grace we can walk in the Spirit. And as we walk in the Spirit, the indwelling Jesus Christ, by the power of His Spirit, begins to live His own life--the Christ-life--through us. And when that happens we find that we are more than conquerors through Him Who loved us (see note Ro 8:37).  (see sermon entitled Seven Ways To Break Bad Habits). (Bolding added for emphasis)

Guzik comments that ...

if we walk in the Spirit (instead of trying to live by the law), we naturally (Ed note: I would add "supernaturally") shall not fulfill the lust (desire) of the flesh. Again, the fear of the legalist - that walking in the Spirit gives license to sin, and that only legalism can keep us holy - is just plain wrong.

Walk is a common picture of traveling the “road of life” and making progress upon it. How are you progressing in life? Also, many people have a distinct walk, and can be identified by the way they walk. So, how do you walk? What can others tell by your walk? It should be a walk in the Spirit.

What does it mean to walk in the Spirit?

First, it means that the Holy Spirit lives in you.

Second, it means to be open and sensitive to the influence of the Holy Spirit.

Third, it means to pattern your life after the influence of the Holy Spirit. (Ed note: Or stated another way, you yield, surrender or submit to His desires rather than the desires of your old flesh nature.)

How does the Holy Spirit influence our life?

First, He reveals His will to us through the message of the Bible. (Ed note: Application question - are you in the Bible daily and better yet is the Bible in you daily? If not, you will be less prone, less likely to walk in the Spirit! The Spirit of truth takes the Word of truth and enables us to walk in the truth, cp Ps 86:11 - Spurgeon adds that "When taught I will practise what I know, truth shall not be a mere doctrine or sentiment to me, but a matter of daily life. The true servant of God regulates his walk by his master's will, and hence he never walks deceitfully, for God's way is ever truth. Providence has a way for us, and it is our wisdom to keep in it. We must not be as the bullock which needs to be driven and urged forward because it likes not the road, but be as men who voluntarily go where their trusted friend and helper appoints their path." [cp 3 John 1:4 "I have no greater joy than this, to hear of my children walking in the truth"])

Second, He influences us through others who walk in the Spirit.

Third, He influences us through an inner direction that we become more sensitive to, and respond to better, as we mature in Jesus.

How can you tell if someone walks in the Spirit? They look a lot like Jesus! Jesus told us that the mission of the Holy Spirit would be to promote and speak of Him (John 14:16-17, 14:26, 15:26, 16:13-15). When someone walks in the Spirit, they listen to what the Holy Spirit says as He guides us in the path and nature of Jesus. (Galatians 5)

How saints walk in the midst of a crooked and perverse generation is important to Paul. In his letter to the Colossians Paul used peripateo in his charge to the believers...

To walk in Christ is to live a life patterned after His life (eg, see Peter's discussion of in His steps) and empowered by His Spirit. In Colossians 1 Paul explained how this this is possible...

When you awaken each morning with a desire to submit your will to His, and walk step by step as He guides and enables, then you are learning to walk in the Spirit, a walk which is worthy of the Lord.

be (present imperative = command calling for this "divine imitation" to be a believer's way of life) imitators of God, as beloved children and walk in love, just as Christ also loved you, and gave Himself up for us, an offering and a sacrifice to God as a fragrant aroma." (Comment: Note that walk is again the verb peripateo in the present imperative commanding a way of life and daily conduct continually in the sphere of unconditional, sacrificial love, the love that God is, the love that is a fruit of His indwelling Spirit in the yielded, obedient saint. This is walking in the Spirit for there is simply no other way to "imitate" the Holy God and His Holy Son, unless we do so by the Holy Spirit.) (See note Ephesians 5:1; 5:2, cf Ephesians 4:1)

Next, for religion's sake, strive to be like Jesus... especially for Christ's own sake, imitate His example. Christian, lovest thou thy Saviour? Is His name precious to thee? Is His cause dear to thee? Wouldst thou see the kingdoms of the world become His? Is it thy desire that He should be glorified? Art thou longing that souls should be won to Him? If so, imitate Jesus; be an "epistle of Christ, known and read of all men." (as you walk in the Spirit) (from Morning and Evening)

PRACTICALLY SPEAKING...
HOW CAN I WALK IN THE SPIRIT?

John Piper gives us some practical guidelines to "optimize" our walk in the Spirit...

What, very practically, is involved in obeying the command, “Walk by the Spirit”?

Five Steps Toward Walking by the Spirit

Let me conclude by mentioning five things that I think we must do so that it can be truly said that we are walking by the Spirit.

1. Acknowledge - First, we must acknowledge from our hearts that we are helpless to do good apart from the enablement of the Holy Spirit. As Paul says in Romans 7:18 (note),

“I know that in me, that is, in my flesh, dwells no good thing.”

What did Jesus mean when he said in John 15:5,

“Without me you can do nothing”?

Of course we can do something without Jesus: we can sin! But that’s all we can do. So, the first step of walking by the Spirit is: admit this fact and let it have its devastating effect on our pride. We cannot do anything pleasing to God without the constant enablement of the Spirit.

2. Pray - Second, since it is promised in Ezekiel 36:27 that God will put his Spirit within us and cause us to walk in his statutes, pray that He do it to you by His almighty power. Many of you know the glorious, liberating experience of having an irresistible desire for sin overcome by a new and stronger desire for God and His way. And as you look back, to Whom do you attribute that new desire? Where did it come from? It came from the merciful Holy Spirit. Therefore, let us pray like Paul did in 1Thessalonians 3:12 (note) for that chief fruit of the Spirit:

“Now may the Lord make you increase and abound in love to one another and to all men.”

And let’s pray like the writer to the Hebrews did in Hebrews 13:20; 21 (note),

"And now may the God of peace… equip you with everything good that you may do His will, working in you that which is pleasing in His sight through Jesus Christ."

If it is God alone Who works in us what is pleasing in His sight, then above all, we must pray.