What Exactly Is Meant By “Holy”?

Holy is that which has been chosen and set apart by YHWH; divested of its common character by special ceremonies, it has received a character of its own and now lives in this new condition in accordance with the laws prescribed for it. Israel is a holy people because God has chosen it and set it apart; it has been incorporated in a covenant and must now live in conformity to all his laws, including the ceremonial. Holy is that which in all things conforms to the special laws God has ordained for it. Holiness is perfection, not only in a moral sense, but in the comprehensive sense in which the unique legislation of Israel conceives it: a religious, ethical, ceremonial, internal, and external sense.
…The holiness by which YHWH put himself in a special relation to Israel and which totally claims Israel for the service of YHWH is finally supremely manifest in that in Christ God gives himself to the church, which he redeems and cleanses from all its iniquities.
- Herman Bavinck, Reformed Dogmatics: God and Creation, 219-21.