The children of Israel celebrated the dedication of the house of God with joy. The temple in Jerusalem played a central role in the lives of the sons and daughters of Israel. It can be said that all the aspects of their lives revolved around the temple. For the temple was not just another place of worship. The temple was the house of God, the dwelling place of Yahweh. The temple was where the ark of the covenant was kept and, as such, was the physical sign of the Lord’s presence in the community. It can be safe to say that the temple was part of the identity of the Israelites, and from the dispersion that took place following the destruction of the temple in 587 BC, it is easy to understand the rejoicing and celebratory dancing that accompanied its re-dedication.  
The decree of King Cyrus that opened the way for the Israelites to return to their land singled out the building of the house for the Lord (the temple) in Jerusalem as the primary objective. This is because the re-constitution or the re-establishment of the nation of Israel had to take place around the temple. The temple as the house of worship was to be instrumental in the mission God had given Israel (cf. Isaiah 60:1-3). 
The re-building and dedication of the temple was a joyous occasion for the Israelites because it marked a new beginning in their relationship with God. That God had allowed the temple to be re-built was an indication that the Lord had forgiven their sin of rebellion (which had led to the destruction of the temple) and given them a second lease of life. The presence of the temple was an assuring sight to the people: the Lord was once gain living in their midst.