Israel had been declared holy by God because they were part of his covenant. However, the Promised Land did not yet completely belong to the holy nation. Some cities were still dominated by heathens. Saul and the judges had failed to clear the land.
David expressed his delight in the saints
in the land, that is, those righteous who had remained true to Yahweh and his covenant. Even though many of them must have been humble and poor, David considered these people excellent.
3 As for the saints in the land, they are the excellent ones, in whom is all my delight.