Psalm 134 is a short psalm, a call to the Levites who served in the temple at night to praise God. Verse 2, "Lift up your hands in the sanctuary. Praise Yahweh!" is a concise command with several key elements:

"Lift up your hands": Raising hands was and is a common gesture of prayer and worship. It signifies surrender, openness to receive from God, and a reaching out to Him. It's a physical expression of an internal attitude of adoration and submission.
"in the sanctuary": This refers to the temple or, more broadly, the place set apart for worship of God. The Levites were specifically serving in this dedicated space. The phrase implies that worship is to be offered in the proper place, according to God's instructions.
"Praise Yahweh!": This is the core command: to offer praise to God. "Yahweh" is God's covenant name, emphasizing His faithfulness and personal relationship with His people. Praise involves acknowledging God's attributes, His deeds, and His worthiness of honor.
Together, the verse implies that outward physical expressions of worship (lifting hands) are a suitable way to enhance inward praise.