What does Psalm 66:7 mean?

As God's chosen people (Deuteronomy 14:2), Israel was unique. References to "the nations" in the Old Testament usually imply people not part of that relationship: Gentiles. In this psalm, that idea is being blended with the more literal idea of every person and tribe on earth (Psalm 66:1). The nations were ruled by kings, but the psalmist referred to God as the sovereign who reigns forever. Those with thoughts of mutiny against the Lord are advised to keep their arrogance in check.

Earthly kings come and go. The King of the universe is eternal. He is greater than any country; He keeps watch over the entire world. As the One who chose Israel for His own purposes, God acted as a watchman—a defender, when necessary—to see what other nations planned to do. A powerful example is His destruction of a huge Assyrian force which besieged Jerusalem when Hezekiah was king. God's angel killed tens of thousands of enemy soldiers overnight (Isaiah 37:36) and the survivors quickly fled to their own country.

The book of Revelation predicts the final defeat of the unruly, rebellious nations. John (Revelation 1:1) describes a satanic figure and kings of the earth with gathered armies to make war against Christ (Revelation 19:19). However, Christ slays them without resistance (Revelation 19:15, 19–21). Considering what God had done to "the nations" and would do, rebellion against God is unwise.