Daniel 2:1 (TS2009)
And in the second year of the reign of Nebukadnetstsar, Nebukadnetstsar had dreams. And his spirit was so troubled that his sleep left him.

I believe that Daniel 2 gives an overview of the history of all earthly empires from Babylon to the future and last Global Empire or world government. The time in history is around 600 BC. The dream of Babylonian King Nebuchadnezzar is a prophecy about the kingdoms that come after the Babylonian Empire. God punished His people who kept turning their backs on Him. Nebuchadnezzar destroyed Jerusalem and he burned the temple in 586 BC (Jeremiah 52). Then the Babylonian captivity began which would last for 70 years (Jeremiah 29:10). Persian king Cyrus the Great allowed the Jews to return in 539 BC shortly after he conquered Babylon (Ezra 1:1-4). A little later the construction of the second temple was started.

See Daniel 2:2-30. King Nebuchadnezzar wants his dream interpreted and calls for all the magicians, astrologers, practisers of witchcraft and Chaldeans. But no human being can predict and interpret dreams. Therefore they try to deceive the king by asking for the dream so they can then make up an interpretation. This angers Nebuchadnezzar and he eventually orders the killing of all the wise ones of Babylon. When Daniel hears this he says he will interpret the dream in order to save his life and that of the king's people. He prays to God and receives the dream and its interpretation.

Daniel 2:31-33 (TS2009)
You, O sovereign, were looking on, and saw a great image! This great image, and its brightness excellent, was standing before you, and its form was awesome. This image’s head was of fine gold, its chest and arms of silver, its belly and thighs of bronze, its legs of iron, its feet partly of iron and partly of clay.

The image represents an idol (Daniel 3). One of God's ten commandments is to not make any carved images (Exodus 20:4, Deuteronomy 4:16, Deuteronomy 5:8). So this image is against the law of God. The image is in the form of a man. It likely is the same as the image of the beast from Revelation 13:15 (see Number of the Beast).

Daniel 2:34-35 (TS2009)
You were looking on, until a stone was cut out without hands, and it smote the image on its feet of iron and clay, and broke them in pieces. Then the iron, the clay, the bronze, the silver, and the gold were crushed together, and became like chaff from the summer threshing-floors. And the wind took them away so that no trace of them was found. And the stone that smote the image became a great mountain and filled all the earth.

The stone is cut out without hands. This means that the destruction of the image is not by human hands or human power. It is by the Hand of God (Ephesians 1:19-23). The stone symbolizes the Son of God Psalm 118:22, Matthew 21:42, 1 Corinthians 10:4) who will destroy this image and replace it with the Kingdom of God (Psalms 48:1-6). The future Kingdom of God is called the New Jerusalem (Revelation 21:2) and it is symbolized as the mountain of God (Zechariah 8:3).

Daniel 2:36-38 (TS2009)
This is the dream, and its interpretation we declare before the sovereign. You, O sovereign, are a sovereign of sovereigns. For the Elah of the heavens has given you a reign, power, and strength, and preciousness, and wherever the children of men dwell, or the beasts of the field and the birds of the heavens, He has given them into your hand, and has made you ruler over them all. You are the head of gold.

The head of gold represents the Babylonian Empire which ruled at the time of this prophecy. As the head of the complete image it likely symbolizes the great influence it had on all subsequent empires. Nebuchadnezzar is called king of kings and holds a special place before God. He played a defining role in the Babylonian captivity of God's people. He allowed the kingdom of Judah, including Jerusalem, to remain inside the Babylonian Empire. But king Jehoiakim revolted against Nebuchadnezzar after which the Babylonian king destroyed Jerusalem and its temple. Nebuchadnezzar is the only foreign king who authored a chapter in God's Word, namely Daniel 4.

Daniel 2:39 (TS2009)
And after you rises up another reign lower than yours, and another third reign of bronze that rules over all the earth.

The chest and arms of silver represent the Medo-Persian Empire. Likely the two arms represent the Medes who formed an alliance with the more powerful Persians. The belly and thighs of bronze represent the Greek Empire. Each succeeding empire was lower than the Babylonian Empire of king Nebuchadnezzar. This likely means that Nebuchadnezzar's rule was the most absolute or autocratic. This is also explained by the king's decision to kill all of his wise ones because they are incapable of knowing his dream and its interpretation (Daniel 2:12). He held absolute power as king whereas the rulers of subsequent empires never regained this much power. So perhaps the complete statue or image symbolizes that the final Global Empire or world government will again have an absolute king in the likeness of Nebuchadnezzar and perhaps this revival is embodied by the second beast in Revelation 13.

The Hebrew word "ara" used here means "land, earth, soil". From the viewpoint of the people of the Old Testament this word points to the land of Israel. The phrase "all the earth" points to the area where all descendants of the twelve tribes of Israel, God's people, live. Therefore the third empire that rules over "all the earth" is the Greek Empire which conquered all the lands inhabited by those descendants. The Son of God was sent to the "lost sheep of the House of Israel" (Matthew 15:24). Since many Israelites rejected the Son of God, God opened the Good News to all people in the world with the purpose of bringing back the Israelites by means of jealousy (Romans 11). The New Testament was largely written in Greek. Greek is the world's oldest living language after Hebrew. The Greek Empire laid the foundation for the Western world to come which would dominate the world until today. From the viewpoint of all people on this earth the phrase "all the earth" literally means the whole world. This makes sense because the complete statue plays a role in the final Global Empire or world government and its head is king Nebuchadnezzar of the Babylonian Empire who is therefore also called "king of kings". So this likely indicates that the future Global Empire will in some essential sense be a revival of the Babylonian Empire with an absolute king like Nebuchadnezzar.

Daniel 2:40 (TS2009)
And the fourth reign is as strong as iron, because iron crushes and shatters all. So, like iron that breaks in pieces, it crushes and breaks all these.

The legs of iron symbolize the Roman Empire. Most likely the two legs represent the Western Roman Empire and Eastern Roman Empire. The metals show that each successive empire conquered and overtook the previous empire and grew in territory and military power, but each empire lost glory. Iron symbolizes strength (Jeremiah 15:12) but its value is low compared to the other metals. The larger the empire the more difficult to rule it. At the height of its existence the Roman Empire was the most powerful economic, cultural, political and military force in the world. The longevity and vast extent of the empire ensured the lasting influence of Latin and Greek language, culture, religion, inventions, architecture, philosophy, law and forms of government on the empire's descendants. See Greco-Roman world. The Roman Empire faded from a strong empire into a divided empire.

Daniel 2:41 (TS2009)
Yet, as you saw the feet and toes, partly of potter’s clay and partly of iron, the reign is to be divided. But some of the strength of the iron is to be in it, because you saw the iron mixed with muddy clay.

The ancient Roman Empire transformed into the Roman Catholic Church and its Roman Catholic elite took control during the Middle Ages and onwards. During the Age of Imperialism Western European imperial powers like Portugal, Spain, The Netherlands, France and England explored, conquered and plundered large parts of the world under the auspices and control of the Roman Catholic Church. Eventually the British Empire became the dominant empire in the world. But the British Empire never dominated the whole world, it always encountered opposition from for example the Russian Empire and China. With World War I and World War II the British Empire transformed into the Anglo-American Empire which now leads the Western world and controls more than half the globe economically and militarily. But also the Anglo-American Empire never controlled the whole world and encountered opposition from for example Russia and China. See for example also new Cold War.

Ever since the Roman Empire the world has been divided in two major power blocks: the Western world and the Eastern world. See also East–West dichotomy. When we compare the statue of Nebuchadnezzar's dream with the vision of the Four Beasts in Daniel 7 then the ten toes might equal the ten horns or rulers who rule shortly before the return of the Son of God. The complete statue likely symbolizes the last Global Empire or world government which will exist for a short period of time and will ultimately be destroyed by God. Completely in line with history and globalization we can see that the power elite are working towards a world government for which they compete for power.

Daniel 2:42-43 (TS2009)
And as the toes of the feet were partly of iron and partly of clay, so the reign is partly strong and partly brittle. And as you saw iron mixed with muddy clay, they are mixing themselves with the seed of men, but they are not clinging to each other, even as iron does not mix with clay.

The mixing of iron and clay likely symbolizes the difficult relationship between the ruling elite who desire more and more power and the people who desire democratic rule. See iron law of oligarchy. There is a growing gap between the power elite and the people. This is confirmed by the ever-growing inequality in the world.

Daniel 2:44-45 (TS2009)
And in the days of these sovereigns the Elah of the heavens shall set up a reign which shall never be destroyed, nor the reign pass on to other people – it crushes and puts to an end all these reigns, and it shall stand forever. Because you saw that the stone was cut out of the mountain without hands, and that it crushed the iron, the bronze, the clay, the silver, and the gold, the great Elah has made known to the sovereign what shall be after this. And the dream is true, and its interpretation is trustworthy.

God will set up His everlasting Kingdom during the last global empire symbolized by the ten toes. God is ultimately in control of everything, including world events. God's people do not have to fear as long as they follow God (1 Chronicles 29:12, 2 Chronicles 20:6, Psalms 103:19).

Daniel 2:46-49 (TS2009)
Then Sovereign Nebukadnetstsar fell on his face, and did obeisance before Daniel, and gave orders to present to him an offering and incense. The sovereign answered Daniel, and said, “Truly your Elah is the Elah of elahin, the Master of sovereigns, and a revealer of secrets, since you were able to reveal this secret.” Then the sovereign made Daniel great and gave him many great gifts, and made him ruler over all the province of Babel, and chief of the nobles, over all the wise ones of Babel. And Daniel asked of the sovereign, and he set Shadrak, Meyshak, and Abed-Neḡo over the work of the province of Babel, and Daniel in the gate of the sovereign.

King Nebuchadnezzar acknowledges God and rewards Daniel. He is the only king of any worldly empire that bowed down before God. Perhaps that is why he was chosen by God to have this dream. Eventually every knee will bend for the One True God Isaiah 45:23, Romans 14:11).