We have seen the Ten Commandments, the initial overview of God’s moral standards for His nation. He’s taking it slow and easy with them, introducing Himself and His ways incrementally.
But first, He wants to impress on them just how real this is. Some of this Moses and his assistants could have faked, but not all of it. What got the people’s attention was a combination of things. There was the nerve jangling noise that isn’t described very clearly, only that it was loud, and the context implies it could be felt. There were flashes of lightening. Something they would surely recognize was the sound of a shofar, the traditional signaling instrument made from a hollowed out ram’s horn. The whole mountain was covered in a dark cloud, like thick smoke, but without the choking fumes.
The nation would have been assembled in a large open space, gathered by clans behind their tribal elders. The whole crowd backed off away from the foot of the mountain because of this demonstration of power. They murmured to their leaders, who in turn told Moses the people were terrified at the idea that God would speak to them, if this was any representation of His power. They would rather hear from Moses as God’s human spokesman.
Moses explained that all of this was a test. God wanted to show them some representation of His power so they would take the whole thing seriously. Don’t play games with God. If they expected to be at peace with their new Sovereign, they needed to commit to Him from the heart. God tacitly accepted their proposal to have Moses serve as His voice to them, since this was His plan in the first place. He was going to hold them to it.
To emphasize that point, Moses went back into that terrifying dark cloud of God’s Presence. While there, the Lord told Moses what he must tell them as the next step in their introduction to God’s ways. The starting point on this path is for them to realize that God had indeed spoken Himself to them from Heaven, and they witnessed that God spoke with Moses. Let there be no further questions about whom God chose to represent Him.
Then the Lord cites what was up to that point the common knowledge of those who sought His attention. We can see how this simplified protocol appears several times later on. It would have been the core of what Balaam knew as a scholar of deities (Numbers 23), though perhaps his was a somewhat confused version. Here the Lord clarifies things as the foundation upon which one builds a proper worship of Him.
There shall be no images of Him, nor any other deities in His domain. The wording almost sneers at the notion that human hands can shape something that would suffice in the first place to portray any deity. Even silver and gold, their most precious materials in that time and place, were not good enough. God demanded personal devotion, not some silly rituals via some inert proxy.
His altar would be the one He made Himself — plain earth. This would include dirt and/or stones. Everywhere they went as tent-dwelling nomads, when God appointed in that place that they should raise a monument to His name and offer up the various gifts that He would accept, they must build it from the materials of the ground. And if the ground was mostly stones, then they must use them as is. Any tooling was defiling. God would provide; they must use what He provides in the condition they find it. They can move it and stack it, but nothing more.
Finally, it can’t be raised up very high. There should be no need for stairs or ramps. This changes later, but He makes obvious the reason for this provision: His worship must be sober and without vulgarity. Unnecessary exposure of certain body parts was defiling. Most men did not wear long flowing robes, but shorter garments with no underwear. So to prevent any accidental exposure, whoever presents the offering on the alter must be standing down on ground level, so the altar must also be reachable from the ground.
This was pretty much what had stood under the Covenant of Noah. This is the baseline for calling on the Creator of all things. It was not likely all that new to them, but was a clarification of things that might have been obscured by conflicting traditions. Here is God culling the junk notions about Himself, and through Moses pulling out from the confused mass of traditions what was the actual true story about Him.