"Why do the nations conspire and the peoples plot in vain?" NIV translation
God is asking this question and we see that the rebellion has spread from one man (Adam) to many men. They put their heads together and come up with a plan to glorify themselves instead of God. We see the first example of this in Genesis 11 with the record of the Tower of Babel.
"The kings of the earth take their stand and the rulers gather together against the Lord and against his Anointed One." NIV translation
Here, we see that it is a combination of the political leaders (kings) and religious leaders (rulers). They join together to try to replace God. The first example of this happened when Herod and Pilate joined with the Jewish leaders to crucify Jesus. Today, this happens in many countries around the world as governments and religious leaders get together to try to stop the spread of the good news of Jesus Christ the Son of the living God. We also see, in Revelation 13, that it is going to happen again in the future.
"'Let us break their chains,' they say, 'and throw off their fetters.'" NIV translation
This plan revolves around a false idea of freedom as they seek to cast off God's laws (the Ten Commandments). We first saw this, in Genesis 3, when Adam and Eve disregarded the one rule that God gave them. We see it today in varying degrees from a ban on the public display of the Ten Commandments to a twisting of God's Word for personal gain.
"The One enthroned in heaven laughs; the Lord scoffs at them." NIV translation
God the Father is in heaven watching the schemes of man and here we get to see His reaction to them. He laughs but it is not a laugh because of something is funny. Instead, it is a sort of chuckle at just how ridiculous the idea is that man knows better than God. We all must admit that many times we kinda say to God "I got this" instead of turning everything over to Him and His will. This is much like a little kid putting on a parent's clothes and saying that they are going to go to work in the parent's place. The parent, like God, will probably just give a chuckle and shake of the head.
Psalm 2:5 & 6
"Then he rebukes them in his anger and terrifies them in his wrath, saying, 'I have installed my King on Zion , my holy hill.'" NIV translation
God puts up with our ignorance for a time but His next reaction is judgment as Jesus returns to the earth. These events are described in Revelation 14.
"I will proclaim the decree of the Lord: He said to me, 'You are my Son; today I have become your Father." NIV translation
God proclaimed that Jesus was His Son when Jesus came up out of the water after being baptized. The fact was displayed in the resurrection when the Father took His Son to be with Him.
Psalm 2:8 & 9
"'Ask of me, and I will make the nations your inheritance, the ends of the earth your possession. You will rule them with an iron scepter; you will dash them to pieces like pottery.'" NIV translation
God has decreed that all of the earth belongs to Jesus Christ. He rules today and will rule forever. Those that accept Him as Lord and Savior, will be His but those that do not will be judged. We see a picture of this in Revelation 5 where John saw the Lamb opening the scroll which is the deed to all of creation.
"Therefore, you kings, be wise; be warned, you rulers of the earth. Serve the Lord with fear and rejoice with trembling. Kiss the son, lest he be angry and you be destroyed in your way, for his wrath can flare up in a moment. Blessed are all who take refuge in him." NIV translation
Because of God's decree concerning Jesus, the rulers and all people are given a choice. They can embrace Jesus and be blessed or they can suffer the wrath that is to come. This is a reminder to us today that there is only one way to be saved from this coming wrath and that is through God's Son who is Jesus. It is getting more and more politically incorrect to say it but it is just as true today as it was in the day that Psalm two was written.