Psalm 2 portrays a preparation for war. The kings of the earth are being viewed from a heavenly point of view. It is as if God and those in the heavenly throne room are looking down on the children of men and wondering at the presumptive foolish plans of earthly rulers.
The interpretation depends on what one thinks of the fate and purpose of the Messiah. This could be taken to mean the Gentile world battling against God's people and the Messiah of God's Chosen people. Or, it could mean the Jewish rulers of Jesus' day fighting against Jesus as Messiah. Or it could be a Psalm that looks ahead to the end of days when all the world battles against God.
Whatever the case, the imagination of the people are a vain thing. No matter how powerful the kings of the earth are, they cannot battle against the Lord. As it is written in Proverbs 21:30, There is no wisdom nor understanding nor counsel against the LORD.
Humanity and human kings may seek to shake off the Lord's rules but their petty struggles only causes the Lord to mock them. In the first Psalm humans mocked those who follow God's path. In this second Psalm, God Himself laughs at those who seek to walk their own rebellious path.
1Why do the heathen rage, and the people imagine a vain thing?
2The kings of the earth set themselves, and the rulers take counsel together, against the LORD, and against his anointed, saying,
3Let us break their bands asunder, and cast away their cords from us.
4He that sitteth in the heavens shall laugh: the Lord shall have them in derision.
5Then shall he speak unto them in his wrath, and vex them in his sore displeasure.
Verse six declares that God Himself will set up a king on Israel's holy mountain.
6Yet have I set my king upon my holy hill of Zion.
The reader of the Psalm then overhears a Promise which the Lord makes to the Messiah:
7I will declare the decree: the LORD hath said unto me, Thou art my Son; this day have I begotten thee.
8Ask of me, and I shall give thee the heathen for thine inheritance, and the uttermost parts of the earth for thy possession.
9Thou shalt break them with a rod of iron; thou shalt dash them in pieces like a potter's vessel.
Then the Holy Spirit speaks to the kings of the earth:
10Be wise now therefore, O ye kings: be instructed, ye judges of the earth.
11Serve the LORD with fear, and rejoice with trembling.
12Kiss the Son, lest he be angry, and ye perish from the way, when his wrath is kindled but a little. Blessed are all they that put their trust in him.