YHWH (“Yah” being the abbreviated form of the divine name) is the one to be praised. For God to be praised in his sanctuary (“in his sanctuaries” or “among his holy ones,” LXX) could mean either in his heavenly sanctuary or in his representative dwelling place, the temple in Jerusalem. The “firmament of his strength” probably denotes the sky or the celestial dome, where his might is displayed in an impressive way. There, too, YHWH is to be praised.
The Most High is deserving of praise for who he is and what he has done. His mighty deeds would include his creative works and his acts of deliverance. As the Almighty, his greatness surpasses everything and everyone, and so is “abundant.”
In their expressions of praise, the people are invited to use musical instruments and dance. Praise YHWH with the shofar (ram’s-horn trumpet) or the trumpet (LXX), the harp, the lyre, and the tambourine, and praise him with dance. (Compare 2 Samuel 6:15, 16.) “Praise him with strings and pipe [musical instrument, LXX],” the resounding cymbals (melodious cymbals, LXX) and the clashing cymbals. The small cymbals made a melodious tinkling sound, whereas the large cymbals resounded with deeper and louder clashing.
The psalmist concludes with the imperative for all creation, everything that breathes, to praise Yah.
Note: Regarding the divine name (YHWH), see Psalm 1.