Remember there was no permanent Jewish Temple structure when David was alive. God promised David that a son of his would build such a temple. David's son, Solomon, built the first official Jewish temple after David died. Since God made the promise to David, he acted on it and organized all of the materials for this temple to make it easier for his son to build it. (References to these events include 2 Samuel 7, 12-14, 2 Chronicles 35:3, 1 Chronicles 22:5)
In this verse, we observe the Psalmist bowing toward a temple that has not been constructed. Why would David be doing that? David is thanking God for the promises made to him concerning the fact that a son of his would rule the world forever from this location. As noted earlier, probably David organized the materials to build this temple in the hopes that his immediate son would be the promised Messiah.
In the second half of the verse, David is saying that God's name and His word are exalted above all things and that is David's motivation for his actions. David is grateful for the promises made to him about his future and now he is taking a moment to show gratitude to God for these future promises.
Practically speaking, the Psalms are much more than a history book. They are here to teach us about our own prayer relationship with God. Think of it this way: God did fulfill the promise to David in that Solomon did build a great temple to God. However, the promise made to David was not completely fulfilled in Solomon. That promise in 2 Samuel 7:13 says, "I will stablish the throne of his kingdom for ever." The key word is forever.
The throne of the descendants of David did last for many centuries, but it did not last forever (at least not forever in a literal sense). There are some Christians through the centuries who see this "forever" promise by the fact that Jesus rules over the hearts of billions of believers forever. Remember, Jesus was a physical descendant of David. However, as one can tell by history, Jesus never did rule over the earth. I am sure He rules in heaven but ruling over the earth is an unfulfilled promise to David.
Therefore, this verse has a far reaching view as God's word says that Jesus will return one day the same way He left (Acts 1:11). The purpose of His return is to establish a literal kingdom on this earth in which He will reign as King of kings and Lord of lords. During this future earthly millennial rule upon earth, Jesus will be fulfilling the the promise made to David that a descendant of his would rule from David's throne in Jerusalem.
This is great doctrine taught in Revelation 20:2-7 referred to as the Millennium and for this event to occur, Israel has to exist as a nation. This is why every child of God should be "pro-Jewish", knowing that one day in the future Jesus will rule from this place.
Surprisingly, all of this background leads us back to verse 2. The point here is that David is bowing toward this nonexistent temple in effect to acknowledge God's promise that a descendant of his would rule the world from this future temple. In effect, David is saying, "I trust in God and I trust in His word to be true. Because I trust in His word, I look forward to this future temple being built so I too can worship God who will rule the world from this temple."
Certainly, this does not mean that we need to pray toward this nonexistent temple in this day. However, it does mean we know God in the sense that we trust in His promises to come true one day. Those promises include the truth that a descendant of David, Jesus Christ, will rule the world from Jerusalem for 1000 years.