Commentary on the beginning of Surat Al-Mulk
Question

What is the meaning of the words of Allah, may He be exalted (interpretation of the meaning): “Blessed is He in Whose Hand is the dominion, and He is Able to do all things. Who has created death and life, that He may test you which of you is best in deed. And He is the All-Mighty, the Oft-Forgiving” [al-Mulk 67:1-2]?
Praise be to Allah.Allah, may He be exalted, says at the beginning of Surat Al-Mulk (interpretation of the meaning):
“Blessed is He in Whose Hand is the dominion, and He is Able to do all things.
Who has created death and life, that He may test you which of you is best in deed. And He is the All-Mighty, the Oft-Forgiving” [al-Mulk 67:1-2]. 
Here the Lord, may He be exalted, declares Himself to be blessed and highlights His greatness, and He declares Himself to be far above any faults or shortcomings. So He, may He be glorified and exalted, says (interpretation of the meaning): “Blessed is He in Whose Hand is the dominion” i.e., venerated, exalted and blessed be He, for He is above all faults; His goodness is great and His kindness is all-encompassing. In His hand is the dominion of both the upper and lower realms, for He is the One Who created them and Who controls them as He wills, in terms of both universal decrees and religious rulings, in accordance with His wisdom. 
It says in Lisaan al-‘Arab (10/396): 
Tabaraak Allah (blessed be Allah) means: Holy is He, and exalted and great. This attribute cannot be applied to anyone other than Him, for He is holy and pure. Abu’l-‘Abbaas was asked about the meaning of the phrase Tabaraak Allah, and he replied that it refers to His being exalted. Az-Zajjaaj said: Tabaraak is derived from the word barakah (blessing). This was also stated by the linguists. The meaning of the word barakah is an abundance of all kinds of goodness. 
“and He is Able to do all things”: one aspect of His greatness is His perfect might and power, by which He is able to do all things. By His might and power He created all that exists of mighty creations, such as the heavens and the earth.
Tafseer at-Tabari (23/505) 
Nothing can prevent Him from doing anything, and He is not incapable of anything. 
“Who has created death and life” that is, He has decreed for His slaves that He will give them life then cause them to die. 
So He causes to die whomever He wills and whatever He wills, and He causes to live whomever He wills and whatever He wills for an appointed term. 
“that He may test you which of you is best in deed” that is, so that He may test you to see which of you, O people, will be most obedient and most eager to seek His pleasure. 
Ibn Katheer (may Allah have mercy on him) said: 
“that He may test you which of you is best in deed” i.e., will do the best deeds, as Muhammad ibn ‘Ajlaan said. He did not say “most in deeds.”
End quote from Tafseer Ibn Katheer (8/197) 
Shaykh al-Islam Ibn Taymiyah (may Allah have mercy on him) said: 
“that He may test you which of you is best in deed” – al-Fudayl ibn ‘Iyaad said: Who will be most sincere and most correct (in deeds). They said: O Abu ‘Ali, what does most sincere and most correct mean? He said: If the deed is sincere but is not correct, it will not be accepted; and if it is correct but is not sincere, it will not be accepted, unless it is both sincere and correct. 
What is meant by sincere is that it is done for the sake of Allah alone, and what is meant by correct is that it is done in accordance with the Sunnah. That is the true meaning of the words of Allah, may He be exalted (interpretation of the meaning): “So whoever hopes for the Meeting with his Lord, let him work righteousness and associate none as a partner in the worship of his Lord” [al-Kahf 18:110].
End quote  from Majmoo‘ al-Fataawa (1/333) 
Ibn al-Qayyim (may Allah have mercy on him) said:
Allah, may He be glorified and exalted, only created the heavens and the earth, death and life, and adorned the earth with all that is on it, in order to test His slaves and see which of them is best in deed, not which of them will be most in deed. 
The best deed is that which is most sincere and most correct, and is in accordance with that which pleases Him and which He loves, not that which is greatest in quantity but devoid of these characteristics. Allah, may He be glorified and exalted, loves people to worship Him by doing that which is more pleasing to Him, even if it is small in quantity, rather than that which is greater in quantity but is not pleasing to Him or that which is greater in quantity, but other deeds are more pleasing to Him than that. Therefore two deeds may appear to be outwardly the same, but there is a great difference between them. Indeed, between a small amount of one deed and a great amount of another there may be a difference greater than the distance between heaven and earth.
End quote from al-Manaar al-Muneef (p. 30-31) 
As-Sa‘di (may Allah have mercy on him) said: 
That is, that which is most sincere and most correct. Allah created His slaves and brought them forth in this world, and told them that they will depart from it. He ordained commands and prohibitions for them, and tested them with desires that are contrary to His commands. Whoever submits to the command of Allah and does good, Allah will grant him goodly reward in both realms, but whoever goes along with the whims and desires of his nafs and goes against the command of Allah will have the worst requital.
End quote from Tafseer as-Sa‘di (p. 875) 
What we must do is ensure that our deeds are sincerely for the sake of Allah, may He be exalted, without showing off or seeking to enhance our reputations, and they must be in accordance with the Sunnah, without introducing any innovations. These are the two conditions of any deed being acceptable. Allah created death and life in order to test people and see which of them will be most sincere towards Allah and most assiduous in following His Messenger (blessings and peace of Allah be upon him). 
“And He is the All-Mighty” to Whom belongs all might and power, by means of which He subjugated all things, and all creatures submit to Him. 
Ibn al-Atheer (may Allah have mercy on him) said: 
The All-Mighty is the One Who is dominant and strong, and cannot be overcome. The word is derived from a root meaning strength, might and dominance.
End quote from an-Nihaayah (3/228) 
“the Oft-Forgiving” Who forgives those who commit bad deeds, fall short and commit sins, especially if they repent and turn to Him. He will forgive their sins, even if they reach as high as the clouds in the sky, and He will conceal their faults, even if they fill the whole world. 
It says in an-Nihaayah (3/373): 
The Oft-Forgiving and Most Forgiving – these divine names refer to the One Who conceals the sins and faults of His slaves, and overlooks their mistakes and errors. The root meaning is concealment or covering. End quote. 
So Allah is All-Mighty and dominant, and He wreaks vengeance upon those who disobey Him and turn away from Him, but He is Oft-Forgiving and Most Merciful, and He forgives whomever He wills of His slaves who do bad deeds and fall short, and He has mercy on them. 
As He, may He be exalted, says of Himself in another verse (interpretation of the meaning): “The Forgiver of sin, the Acceptor of repentance, the Severe in punishment” [Ghaafir 40:3]. 
See also:
Zaad al-Ma‘aad (4/313-314); Tafseer al-Qurtubi (18/206-208); Fath al-Qadeer (5/308) 
For information on the virtue of reciting Surat Al-Mulk frequently, please see the answer to question no.  191947 
And Allah knows best.