The division of people into the nation of Israel and the nations of the world, which Baal HaSulam describes in his articles, can be interpreted in two senses: inner and outer. When understood in the inner sense, it describes how qualities are divided within every person, with “Israel” designating one’s aspiration “straight toward the Creator” or the point in the heart that has awakened in a person, whereas the “nations of the world” are the desires of reception.
Any person whose point in the heart (aspiration to reveal the Creator) has awakened can be called “Israel,” which means “straight toward the Creator.” If one’s point in the heart has not awakened yet, then he belongs to the nations of the world, meaning to all other goals in life.
All the people can be categorized in this fashion and divided into Israel and the other nations. This is the same as what once occurred in Ancient Babylon.
When considering those whose point in the heart has not awakened yet, the science of Kabbalah must first and foremost be disseminated among the nation of Israel in the material sense. After that it should reach the other nations. In addition, the nations of the world include the ten tribes of Israel that fell to the level of “the nations of the world” from the height of the First Temple (Mochin de Haya).
From the 3rd part of the Daily Kabbalah Lesson 4/8/10, “Exile and Redemption”