What does Acts 7:23 mean?

Moses' life was divided into three periods of forty years. For his first forty years, he grew up in the home of the pharaoh's daughter, receiving the education of the Egyptian nobility (Acts 7:21–22). His birthmother had nursed him as a child (Exodus 2:4–10), and it's evident he still remembered not only his people (Exodus 2:11) but also his birth family (Exodus 4:14, 27–28). Moses spent the middle forty-year period in exile in Midian. In the last third of his life, he rescued the Israelites from slavery and led them through the wilderness to the doorstep of the Promised Land.

The phrase "children of Israel" means the same thing as "Israelites." Abraham is the father of the Israelites. His son Isaac had two sons, Esau and Jacob. Jacob left his homeland to find a wife among his mother's family (Genesis 28:1–5). On his return trip, twenty years later with his wives and children, he literally wrestled with God—possibly a pre-incarnate Christ. God told him, "Your name shall no longer be called Jacob, but Israel, for you have striven with God and with men, and have prevailed" (Genesis 32:28). Throughout the rest of the Bible, Jacob is sometimes referred to as "Jacob" and sometimes as "Israel."

While with his mother's family, Jacob married two sisters, Leah and Rachel, who gave their handmaidens, Bilhah and Zilpah, to him as concubines. Between the four women, Jacob had twelve sons and one daughter. The older sons sold Joseph, the second youngest, to slave traders (Genesis 37:12–28). Joseph was taken to Egypt where he eventually became the second in command of the entire nation (Genesis 41:38–45). During a famine, Joseph was able to bring his father and his brothers' families to Egypt where they would have sufficient provisions (Genesis 46). After Joseph's and Pharaoh's deaths, the new pharaoh enslaved the families.

So, the people from whom Moses came are the "children of Israel," not because they came from the nation of Israel, which didn't exist in Joseph's or Moses' time, but because their single common patriarch was named Israel.