What does Luke 5:26 mean?

The crowd in a house in Capernaum has seen wonders. "Extraordinary things" is from the Greek root word paradoxa. As seen in English words like "paradox," this implies something that defies expectations, or seems impossible.

First, bystanders saw a man on a pallet lowered through the hole in the ceiling. Then they saw Jesus, who had been teaching, declare the man's sins forgiven. Next, they heard Jesus reveal what the Pharisees and scribes were privately thinking (Mark 2:6–7). Finally, Jesus told the man to rise, pick up his bed, and go home—and the man did (Luke 5:17–25)!

The man "went home, glorifying God" (Luke 5:25) and the people join him. The scribes and Pharisees have taught them that if God heals you physically, He healed you spiritually. The point, here, is not whether or not that's theologically accurate. The point is this is how the people understand the situation. What happens cuts into the prejudice of the teachers who oppose Jesus' message.

The crowd members do not yet understand that Jesus is the Son of God and God the Son. They don't know He will die for their sins, rise again, and sit on David's throne. But it is obvious to them, now, that God is present and working in their lives in a way they never expected.