BLESSED and HOLY is the one who has a part in the FIRST RESURRECTION;
This is the fifth of the Revelation "Beatitudes" (complete list is in Revelation 1:3 study). Those of us who accept Jesus Christ as our Lord and Savior understand that because Christ rose again, FIRST RESURRECTION, after He was crucified, we, too are "BLESSED" to partake in the eternal life it brings. However, HOLY is the key word in this phrase.
It is clear that as we enter the 1,000 year period, we are declared and perceived by God to be HOLY. It wasn't always that way. But at this point, we see the eternal state of believers, HOLY, confirmed (Romans 6:1-4-11). Amazingly, this eternal state for each of us is/was known before the earth even was created (Ephesians 1:3-4-14).
over these the SECOND DEATH has NO POWER
The BLESSED and HOLY ones will NEVER see the SECOND DEATH (the LAKE OF FIRE, verse 14). In fact, what we see here is the contrasting eternal state of the unbeliever or wicked. This is when the "wages" will be paid forever (Romans 6:15-23).
but they
To be PRIESTS means to be the spiritual leaders. It is implied in this phrase that sin still exists on the earth during the 1,000 years (Revelation 20:7-8). If there wasn't any sin, there wouldn't need to be any PRIESTS (1 Peter 2:1-9-10). Also this confirms John's opening statement in Revelation 1:6 that we are to minister to GOD because we are of God and of Christ.
David Hocking in his book, "The Coming World Leader, Understanding the Book of Revelation", points out that there will be religious festivals during this period (for example, the Festival of Booths (Zechariah 14:16-21).
Noticeably absent from this list is the Holy Spirit. The Holy Spirit functions now as "the sealer" (Ephesians 1:3-13-14) rather than "the Helper" (John 14:15-24). It is assumed that the BLESSED and HOLY ones already understand this.
The other function besides being PRIESTS is to be administrators. That is what REIGN means. Christ sets the policy, and the BLESSED and HOLY ones will implement that policy. Be aware that during the 1,000 years, this will NOT be a democracy; it is a THEOCRACY. Those of us who live in "free" countries tend to think that a democracy is the ultimate form of government. But as believers, the BLESSED and HOLY ones, we know the form of the final government is a THEOCRACY (Psalm 72).