What does Psalm 26:5 mean?

Continuing from verse 4, David states his effort to avoid close relationships with those living in obvious sin. Included in his comments here are "the assembly" of those who are evil. Since the next passage deals with the house of God (Psalm 26:6–8), some believe David is referring to religious hypocrites within the nation of Israel. It's certainly possible for hypocritically evil people to participate in a religion, and Scripture warns believers to avoid such persons (1 Corinthians 5:9–11). However, the main thrust of David's point seems to be about associating with wicked persons, and their groups, in general. That's a healthy boundary which believers of any era should apply (Proverbs 13:20).

After David's kingship, Israel's spiritual commitment faded. In Isaiah's day, hypocritical worship was rampart. God responded by asking, "What to me is the multitude of your sacrifices?…I have had enough of burnt offerings of rams and the fat of well-fed beasts; I do not delight in the blood of bulls, or of lams, or of goats" (Isaiah 1:11). He appealed to the hypocrites: "Come now, let us reason together…though your sins are like scarlet, they shall be as white as snow; though they are red like crimson, they shall become like wool" (Isaiah 1:18). The Lord desires pure, sincere worship that is prompted by the Holy Spirit and conducted according to truth (John 4:23–24).