The idea is that 1 Peter sees the current situation of the churches to which it is addressed as one of suffering and judgment. Peter looks forward to the coming revelation of Jesus Christ at his return to earth from heaven. That is the time of salvation (Salvation in 1 Peter, as in Paul, is a future event).
The inheritance for which they wait is on lay-away in heaven. It is kept in heaven for the time of Christ's return. They are being guarded as they wait for it. At that point their present sufferings will become glories.
2. But at present, they feel like foreigners in a hostile land. They are sojourning in fear (1:17). They are being purified through suffering. They are being tried like gold in a fire.
As an aside, it seems beyond reasonable doubt to me that the audience is primarily Gentile. A verse like 1:18, which calls their past a "foolish way of life handed down from your forefathers" makes no sense at all of a Jewish background, unless one doesn't understand that Judaism and Christianity were not yet two distinct religions. It is completely anachronistic to think that Peter would say that to Jews.
[Insert rant here about the sad state of biblical education in America right now from my perspective. It's not going to get better any time soon, IMO.]
I picture a Christianity that feels alone and isolated. I picture a Christianity that wonders where God is. It doesn't feel like he's around.
3. In this context, they are to be holy (1:16). In 1 Peter, this is not just being set apart, but implies a moral purity as well. It involves self-control (1:13). It involves pure love for others (1:22). They are to get rid of malice and hypocrisy (2:1).
There is also language that pictures the audience as a replacement temple. If Hebrews was written to Rome and 1 Peter was written from Rome, I muse in a forthcoming book if 1 Peter might have been influenced by Hebrews. Not something I want to die for, though.
So these Gentile believers are a holy priesthood who offer spiritual sacrifices (2:5, 9). They are a holy nation (2:9). If Roman oppression of Israel is part of the background of 1 Peter, this latter statement would also pop. Alas, there could be a richness here that our simple schemes won't let us explore.
Back to reading Augustine...