This is a well-known passage because it ultimately refers to the birth of the Lord Jesus.
It is a threatening time for Jerusalem (and Judah). Samaria has already been taken and destroyed by the Assyrians, and the entire Northern Empire (the ten tribes) has been taken captive (in 722 BC). In 701 BC Jerusalem is already besieged by the Assyrian king, Sennacherib (this is in the time of Hezekiah, see 2 Kings 18:1–37 and 2 Kings 19:1–37; compare Isaiah 36:1–22 and Isaiah 37:1–38).
Micah prophesies of this threatening doom—it says in Micah 4:10, Now you shall go out from the city and…go to Babylon.
And the king (of the house of David) is humiliated by the enemy. See Micah 5:1 which reads: With a rod they strike the judge of Israel (that is, the king) on the cheek.
All this becomes God’s judgment because of the wrongdoings among the people. God threatens the destruction of the people.
Jerusalem is named after the Temple Mount Zion (see Micah 4:10: Writhe and groan, O Daughter of Zion
and Micah 4:11: Let her [Zion] be defiled
). Those are the threatening words of God. Eventually this judgment will also come, and the people will go into exile—even though that is only about 150 years later (in 586 BC). For this exile, see 2 Kings 25:1–30: Nebuchadnezzar (king of Babylon) takes Jerusalem and destroys the city and temple (verse 21: So Judah was taken into exile out of its land
).
In the midst of this threat of God’s judgment comes the prophecy of salvation in Micah 5. This prophecy has remained well known in the Jewish people. After the birth of Jesus, magi (from the East) come to Jerusalem, for they had seen the star and concluded that a king has been born in the Jewish people. When they inquired in Jerusalem where the king would have been born, they were told by the scribes that they had to be in Bethlehem, because that is stated in the prophecy of Micah (see Matthew 2:1–8).
2 But you, O Bethlehem Ephrathah, who are too little to be among the clans of Judah, from you shall come forth for me one who is to be ruler in Israel, whose coming forth is from of old, from ancient days.