What does Psalm 1:5 mean?

When God judges the righteous and the wicked, He will separate the two groups. The righteous will "stand" in His presence, which in this case is contrasted with those who "fall" in the presence of God. Those who fall are the wicked, who will be sentenced to eternal punishment.

Jesus foretold a time when He will separate the sheep from the goats, likewise meaning the righteous from the unrighteous (Matthew 25:31–33). He will welcome the sheep—those who are blessed by the Father—to enter His kingdom (Matthew 25:34). However, He will tell the goats, the unrighteous, "Depart from me, you cursed, into the eternal fire prepared for the devil and his angels" (Matthew 25:41).

Here, in this psalm, Scripture declares that sinners, meaning those who go against God, will be excluded from the congregation of the righteous. The congregation of the righteous may refer to Israel as opposed to the heathen or to faithful Israelites as opposed to the unfaithful Israelites who spurned God's covenant by breaking His laws.

No one can violate God's commandments and refuse to repent without incurring God's wrath. Since all people are guilty of sin (Romans 3:10), only those who accept Christ can be declared free from that penalty of sin (John 3:16–18). Though we all once fit into the category of "wicked" or "sinners" as used in Psalm 1 (Ephesians 2:1–3), God made a way for us to become His children and be counted among the righteous—Jesus Christ (Ephesians 2:4–9; 2 Corinthians 5:21; John 1:12). All who put their faith in Him will be saved (Romans 10:9–13).