The physical temple is simply a model of something greater to come. While it’s true that God dwelt in the holy of holies, the Israelites only experienced God in part. All of heaven and earth were ultimately designed to house the Lord’s glory. Isaiah 66:1 expresses this reality: This is what the LORD says: “Heaven is my throne, and the earth is my footstool. Where is the house you will build for me? Where will my resting place be?” (see also Psalm 78:69)
