This verse is frequently cited in order to discuss the collapse of godly authority. There is a warning in this verse about the catastrophic results that can result from the destruction of fundamental principles. In David's case, this pertains to his role as king of Israel and the consequences of abandoning that role. More generally, it refers to the ruin a society will face when it eliminates the most basic aspects of godliness.
As each one of us has been tested in the furnace of affliction, the Lord will bring us forth as pure gold when we have gone through the trials. As David reminds us, the Lord is righteous, He loves righteousness, and He watches over those who are upright in heart. Even the horrible things that are happening in the world today are used by God for our eternal good and for His greater glory in His grace.
There will come a day when sinful, wicked, and proud men will stand before His Great White Throne of judgment, and each will be judged according to their deeds. Despite the Lord's ability to deliver the righteous from trials, He also reserves the day of judgment for the wicked - to be punished.

Dear Heavenly Father, sometimes I feel overwhelmed by what is taking place on earth. God-hating, Christ-rejecting culture is eroding all foundations of truth and causing evil to grow. I pray I will read, mark, learn, and inwardly digest Your Word of truth in order to stand fast in Christ on this evil day. I stand on Your strong foundation, a rock that can never be shaken because You alone are God.
In Jesus's name I pray. Amen.