When this psalm was written, the city of God was Jerusalem, containing the hill of Zion with the Temple, the place for the atonement of sin. But after Jesus, who was the final temple and sacrifice for sin, the city of God becomes a community of the faithful both in heaven and on earth (Galatians 4:25–29; Hebrews 12:18–24). The community of God’s people is to be “the joy of the whole earth” (verse 2)—an alternate human society based on love and justice rather than on power and exploitation. The earthly Jerusalem never did draw in the nations, but the transformed community of believers in Christ
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