The verse is 4 Nephi 1:17, and it describes what Zion truly is in practical terms:
There were no robbers, nor murderers, neither were there Lamanites, nor any manner of -ites; but they were in one, the children of Christ, and heirs to the kingdom of God.
I do not believe that Zion is a situation where everyone is exactly the same in all ways. That picture scares me more than the traditional lake of fire, frankly. It is the elimination of individuality in all ways that matter - which is exactly opposite of the idea of perfection taught in the Sermon on the Mount. (completeness, wholeness, full development) The verse does not say that these people were "one"; rather, it says they were "in one". That is an intriguing phrase, and it gets overlooked almost always.
As everyone knows who knows me even moderately well, I absolutely LOVE Elder Wirthlin's analogy of the orchestra - where all instruments are valued and unite to create truly "perfect" music, together in full and comprehensive harmony not playing the exact same melody. Solos can be beautiful, but they pale in comparison to complex and intricate arrangements of harmonic grandeur.
To me, the idea of there being no "-ites" among us simply means that we don't create divisive classifications among us - that we don't focus on our "otherness" but rather on our "unitedness". In other words, our differences continue to exist, but, rather than defining how we are separate from others, those differences are used to enhance our unity - to make that unity more "perfect" - more "complete, whole, fully developed". There are piccolos and banjos and bagpipes and kazoos - but there are no competing groups trying to drown out the different "-ites". In this situation, differing individuals become "in one" - part of a "oneness" IN which they constitute a critical element.
That, to me, is Zion - and that is what I have experienced almost fully on at least two occasions in the wards I have attended. It is a mortal achievement of an "at-one-ment" that is awesome and inspiring and empowering and simply stunning. It truly is a marvelous work and a wonder, and it is what I want for my family - my immediate mortal family and my expansive, immortal family, as well.
May we work to ensure that, someday, there will be no -ites among us - and may we have faith and hope that it may happen much sooner and more fully than we naturally could imagine.