Peter finishes the previous section (1:22-2:3) talking about the word of God and how as believers in Jesus we should crave the word like newborns. Here, in verse 4, Peter moves us from the principle of scripture to the person of scripture. We can distinguish between the written word and the word in flesh, Jesus Christ, but we should never separate them. Everything we have in the written word of God is to point us to Jesus Christ. He is the theme of scripture and he is the fulfillment of scripture.
In this section Peter focuses on Jesus being the foundation, the cornerstone of the spiritual house, the church, that is being built by God. For mankind there are only two options when it comes to Jesus. He is either the cornerstone, the foundation of our faith, or he is a stumbling block and one to be rejected. For the believer, we recognize what the unbelieving world does not, that Jesus Christ is the chosen, precious, savior of mankind, the one who has called us out of darkness and into his marvelous light. Because of this truth, what God has done for us through Jesus, Peter describes the identity of the church as a spiritual house, a holy and royal priesthood, a chosen race, a holy nation, and a people for his own possession. And so, as his people who have received such a great mercy, we are called to proclaim the goodness and beauty of our savior to the world.