What is a kingdom of priests?

1 Peter 2 says:

⁹But ye are a chosen generation, a royal priesthood, an holy nation, a peculiar people; that ye should shew forth the praises of him who hath called you out of darkness into his marvellous light:
¹⁰Which in time past were not a people, but are now the people of God: which had not obtained mercy, but now have obtained mercy.

It sounds like we are a royal priesthood by God's mercy for God's praise.  This royal priesthood is also called

• a chosen generation
• an holy nation, and
• a peculiar people.

Since we are made a priesthood by God's mercy, it seems to follow that it is He who is the King.  So is this group the church?  I think it's clear that we are a kingdom, but why priests?

What is a priest?  We know the Israelite priests offered sacrifices, kept the sanctuary (or temple) in order -- it seemed they served as some sort of liaison between God and the rest of the people.

More from 1 Peter:

⁵Ye also, as lively stones, are built up a spiritual house, an holy priesthood, to offer up spiritual sacrifices, acceptable to God by Jesus Christ.

So here's another one of our roles as priests: to offer up spiritual sacrifices.

Some 1 Peter language appears to be coming from Exodus 19:

⁵Now therefore, if ye will obey my voice indeed, and keep my covenant, then ye shall be a peculiar treasure unto me above all people: for all the earth is mine:
⁶And ye shall be unto me a kingdom of priests, and an holy nation. These are the words which thou shalt speak unto the children of Israel.

So the kingdom of priests are those who

• obey God's voice, and
• keep God's covenant.

Romans 12:

¹I beseech you therefore, brethren, by the mercies of God, that ye present your bodies a living sacrifice, holy, acceptable unto God, which is your reasonable service.

Here the concept of sacrifice comes up again: our bodies are a living sacrifice.

These verses lead me to think that a kingdom of priests makes us a kingdom of servants to God.  We do what He wants us to.  It's interesting that He "made" us to be a kingdom of priests, but didn't force us.  His actions attract us to be these various attributes of a priest.

I'm sure there's more to look at here.  This term, "kingdom of priests," appears to be a reference to something that was commonly understood among the first followers of Jesus.  And how do we offer our bodies as a living sacrifice?