This psalm is about how futile it is for anyone–religious leaders, rulers or nations to rage against God.
God laughs at the foolishness of these nations and rulers who are ganging up to rebel against Him and His sovereignty. For centuries many have opposed Christianity. The disciples were persecuted, beaten, thrown in prison and all but John were martyred for the sake of the Gospel. Christians were persecuted by the Roman Empire before Rome adopted its version of Christianity. King Herod plotted to kill God’s Anointed but failed. Jesus was condemned to death by His enemies but He was resurrected.
Many have tried to crush God and His kingdom but have failed.
This reminds me of the men who tried to build a tower that would reach up into the sky. That was a waste of time. God squashed that plan. And this is why He is laughing at the nations and people who are plotting against Him. Their opposition is pointless. The teachings of Jesus continue to spread around the world even in remote places. More and more people are coming to the One who died on the cross for them.
Even though God laughs at their futile efforts to oppose Him, He is still merciful. He offers them a chance to change their ways. He does not act against them which would have been justified because of their defiance but they are warned, “Be wise, O kings.” They are told what to do. They are to serve the Lord with fear, ie reverence. They are to surrender to Him. And then they are to kiss the Son–His Anointed. Why a kiss? A kiss in this context means fidelity and submission. God wants us to submit to His Son, whom He declared, “Yet I have set My King On My holy hill of Zion.” Here God is telling the kings and rulers and those who are defying Him that He has appointed His own King (Jesus) who is greater than them on His holy hill (Jerusalem). God told His Son, “The nations for Your inheritance, And the ends of the earth for Your possession.”
What people fail to realize is that when they oppose Jesus, they are opposing God too. Jesus came here on earth to do the Father’s will. He came as His Representative. When the religious leaders opposed and rejected Jesus as their Messiah, the Christ, God’s Anointed, they were denying the God whom they claimed to be their Father. Yet, God in His mercy sent His Son to reach these people but their hearts were hardened. In vain they worshipped Him.
God wants us to serve Him and worship Him the proper way and to humble ourselves before His Anointed. Like those kings and rulers and nations we must recognize that Jesus Christ is Lord.