Bible Commentary
1. The Lord reigneth The Lord reigns; that is the great truth here laid down. The Lord Jehovah reigns, he that made the world governs it; he that gave being gives motion and power, gives law and commission, gives success and event. Every man's judgment proceeds from the Lord, from his counsel and providence, and in all affairs, both public and private, he performs the thing which he himself has appointed.⁴
Let the earth rejoice Let the earth rejoice, for hereby it is established (Ps. 96:10); it is honoured and enriched, and, in part, rescued from the vanity which by sin it is made subject to. Not only let the people of Israel rejoice in him as King of the Jews, and the daughter of Zion as her King, but let all the earth rejoice in his elevation; for the kingdoms of the world shall, more or less, sooner or later, become his kingdoms.⁴
Multitude of isles Literally, "many isles"; the word translated "isles" may mean both "isles" and "coastlands". Here evidently the islands and coastlands of the Mediterranean Sea are primarily referred to (see Ps. 72:10).⁵

2. Clouds and darkness Descriptive of how the majesty of God reveals itself to the eyes of mortal man.  There are mysteries concerning the Deity man cannot fathom (see Romans 11:33).⁵
Righteousness and judgment See Ps. 89:14. It matters not how great the evil may be, righteousness will ultimately prevail.⁵

3. A fire goeth before him Like an advance guard clearing the way. So was it at Sinai, so must it be: the very Being of God is power, consuming all opposition; omnipotence is a devouring flame which burneth up his enemies round about. God is longsuffering, but when he comes forth to judgment he will make short work with the unrighteous, they will be as chaff before the flame.³

4. His lightnings enlightened the world In times of tempest the whole of nature is lighted up with a lurid glare, even the light of the sun itself seems dim compared with the blaze of lightning. If such are the common lights of nature what must be the glories of the Godhead itself? When God draws aside the curtain for a moment how astonished are the nations, the light compels them to cover their eyes and bow their heads in solemn awe. Jesus in the gospel lights up the earth with such a blaze of truth and grace as was never seen or even imagined before. In apostolic times the word flashed from one end of the heavens to the other, no part of the civilised globe was left unilluminated.³
The earth saw, and trembled In God's presence the solid earth quakes, astonished by his glory it is convulsed with fear.³

5. The hills melted like wax at the presence of the LORD Inanimate nature knows its Creator, and worships him in its own fashion. States and kingdoms which stand out upon the world like mountains are utterly dissolved when he decrees their end. Systems as ancient and firmly rooted as the hills pass away when he does but look upon them.³
At the presence of the Lord of the whole earth His dominion is universal, and his power is everywhere felt. Men cannot move the hills, with difficulty do they climb them, with incredible toil do they pierce their way through their fastnesses, but it is not so with the Lord, his presence makes a clear pathway, obstacles disappear, a highway is made, and that not by his hand as though it cost him pains, but by his mere presence, for power goes forth from him with a word or a glance.³

6. The heavens declare his righteousness It is as conspicuous as if written across the skies, both the celestial and the terrestrial globes shine in its light. It is the manner of the inspired poets to picture the whole creation as in sympathy with the glory of God, and indeed it is not mere poetry, for a great truth underlies it, the whole creation has been made to groan through man's sin, and it is yet to share in the joy of his restoration.³
And all the people see his glory The glorious gospel became so well known and widely promulgated, that it seemed to be proclaimed by every star, and published by the very skies themselves, therefore all races of men became acquainted with it, and were made to see the exceeding glory of the grace of God which is resplendent therein.³

7. Confounded A description of the impression made upon the heathen when the glory of God appears.  The idols are impotent before God.⁵
All ye gods  If the gods of the heathen are referred to, it is only in figure, for theses gods actually no not exist. The Vulgate has: "Adore Him, all ye angels".⁵ Paul quotes this passage as the voice of God to angels when he sent his Son into the world. All powers are bound to recognise the chief power; since they derive their only rightful authority from the Lord, they should be careful to acknowledge his superiority at all times by the most reverent adoration.³

8. Zion  Ps. 97:8 describes the impression made upon Israel when the glory of God appears. Zion rejoiced when she heard the glad tidings that the Lord reigned.⁵
Daughters of Judah Israel rejoiced to see Christ's kingdom victorious among the heathen, and even yet, though for a while turning aside, the daughters of Judah will sympathise in the wide spread reign of Jehovah their God, through the gospel of his dear Son. As the women of Judah went forth to meet David in the dance, singing his victory over the Philistine, so shall they chant the triumphs of David's son and Lord.³
Because of thy judgments They rejoice, not vindictively, but because truth has triumphed.⁵

9. Thou art exalted far above all gods Jehovah is not alone high over Judea, but over all the earth, nor is he exalted over men only, but over everything that can be called god: the days are on their way when all men shall discern this truth, and shall render unto the Lord the glory which is due alone to him.³

10. Ye that love the Lord, hate evil For He hates it, his fire consumes it, his lightnings blast it, his presence shakes it out of its place, and his glory confounds all the lovers of it. We cannot love God without hating that which he hates. We are not only to avoid evil, and to refuse to countenance it, but we must be in arms against it, and bear towards it a hearty indignation.³
He preserveth the souls of his saints Therefore they need not be afraid of proclaiming war with the party which favours sin. The saints are the safe ones: they have been saved and shall be saved. God keeps those who keep his law. Those who love the Lord shall see his love manifested to them in their preservation from their enemies, and as they keep far from evil so shall evil be kept far from them. He delivereth them out of the hand of the wicked.³

11. Is sown From the Heb. zara, "to sow [as of seed in the field]." The word is used figuratively with reference to moral subjects, as to sow "righteousness" (Prov. 11:18), "iniquity" (Prov. 22:8), "wickedness" (Job 4:8) - things which, when sown, may produce a corresponding harvest. "Light" may here be conceived of as a seed sown, ready to spring forth, and bear fruit for the honest seeker after truth. Instead of zara one Hebrew manuscript has zarach, "to shine forth".  This reading is supported by the Syriac and Targums. Zarach is used in Ps. 112:4 in the statement, "Unto the upright there ariseth light".⁵
And gladness for the upright in heart Gladness is not only for one righteous man in the singular, but for the whole company of the upright, even as the apostle, after speaking of the crown of life laid up for himself, immediately amended his speech by adding, "and not for me only, but also for all them that love his appearing."³

12. Rejoice in the LORD, ye righteous The psalmist had bidden the earth rejoice, and here he turns to the excellent of the earth and bids them lead the song. If all others fail to praise the Lord, the godly must not. To them God is peculiarly revealed, by them he should be specially adored.³
Give thanks Man's highest joy should be in the knowledge that there is a God, and that He is the Father of His earthly children.⁵
 

References and notes
1.  King James Authorized Version
2.  The Adam Clarke Commentary - http://www.studylight.org/com/acc/view.cgi?book=ps&chapter=097
3.  Charles H. Spurgeon, "The Treasury of David" - http://bible.crosswalk.com/Commentaries
4.  Matthew Henry Bible Commentary - http://eword.gospelcom.net/comments/psalm/mh/psalm97.htm
5.  Seventh-day Adventist Bible Commentary Vol. 3 pg. 852