This first psalm is sometimes called the "door to the Psalms" because it introduces a basic theme that is seen repeatedly throughout the book. Namely, there are two choices in life: either live for the Lord or live for oneself. This psalm clearly shows that God's favor is upon the righteous and His condemnation upon the wicked.
Blessed (i.e., joyful with divine favor) is the man who avoids the progression of sin described in Psalm 1:1. Metaphorically speaking, we ought not to "walk" near sin, "stand" next to it, or "sit" upon it. Problems begin when one starts listening to the advice of the wicked while walking with them. These problems increase when one stops to spend time with the sinful and make them his companions (cf. I Cor. 15:33). Problems multiply still further when one chooses to sit down and fully embrace the lifestyle of the ungodly.
In strong contrast, the delight of the righteous man is in God's law (Psa. 1:2). He finds ultimate fulfillment, true contentment and satisfaction, in the Scriptures. Psalm 119 is a good commentary on this verse. The blessed man comes to God's word with a disposition to listen and learn from it, not to plug his ears or become angry at it (cf. James 1:19). In fact, this person will give deep reflection and thought to God's word (i.e., meditation)--not just lip service.
If Psalm 1:1 describes what the blessed man does not do, and verse 2 describes what he does do, then verse 3 describes what he is like as a result of what he does and does not do.
"He shall be like a tree planted by the rivers of water." A tree of this sort is firmly grounded and has an abundant root system; it is stable and not likely to be blown over by the storms of life. It has steady access to life-giving water and remains strong consequently. One whose foundation is God and His life-giving word is able to endure any trial!
Such a tree will bring "forth its fruit in its season." A primary purpose of trees is to bear fruit. A healthy, mature tree will not fail in fulfilling its purpose. One who is constantly exposed to and meditates upon God's word will be fruitful for the Lord (cf. Matt. 7:16-20).
The leaves of a healthy tree will not wither. Likewise, one who continually drinks in God's word will not become sickly in spirit. As long as he seeks first God's will, whatever he does will prosper (cf. James 1:25). This is not to say that a godly man will never suffer failure, but that his life will be successful (especially in ultimate terms).
Psalm 1:4 indicates that the ungodly are not like the blessed ones. They are not like trees planted by rivers. They are lacking in spiritual nourishment because they don't rejoice in God's word and meditate upon it. As a result, they are weak, sickly, and unproductive spiritually. They will not prosper because they have made themselves worthless--like chaff!
In the final judgment, they will be separated from the righteous (cf. Matt. 3:12). The wicked will not "stand" (i.e., succeed) before God Almighty (Psa. 1:5; cf. Rev. 6:15-17).
The Lord sees everything and is aware of the activities of the righteous and the wicked (cf. Nah. 1:7). Ultimately, the wicked will not be able to continue in their sinfulness; God will put an end to their practices (Psa. 1:6).