The word “dispensation” means "the administration of a house," or "the management of a household," or "a house-law." In the sense that it is used in Scripture, it is a publicly ordered dealing of God with men in the administration of His ways in His house during various ages.
Since God's house on earth was not established in any real sense until He formally took up relations with Israel on the ground of redemption, and built the tabernacle wherein He could meet with them (Exodus 25-40), we could say that from that time forward there are three main dispensations in the ways of God (See The Concise Bible Dictionary — pp. 216-217). Prior to that, men walked with God as individuals, but there was no publicly ordered
system of God's dealing with men collectively in relation to His house.
The first of these is the Dispensation of the Law which was an ordered dealing of God with men (the nation of Israel) whereby the legal obligations and requirements of the Law were to be fulfilled by the people in order for them to walk in fellowship with God. This administration passed through three phases:
• About 400 years under the Judges (from Israel's entrance into the land of Canaan to the end of the Judges — Acts 13:19-20).
• About 500 years of kingship (from Saul to the Babylonian captivity).
• About 600 years of prophetic testimony during the Times of the Gentiles (from the captivity to John the Baptist (Luke 16:16).
The second dispensation is the present “administration [dispensation] of the Mystery” (Eph. 3:9 – W. Kelly Translation footnote; Bible Treasury, vol. 13, p. 379). This is a special administration for the governing of a heavenly company of people (the Church) in this present Day of Grace. The Apostle Paul was commissioned to “enlighten all” as to what this administration entailed (Eph. 3:9). Three times he speaks of having been “given” a special revelation of truth for the present “dispensation” (1 Cor. 9:17; Eph. 3:2; Col. 1:25). He was to teach the great truths of the Mystery that had been "hidden throughout the ages" concerning “Christ and the Church” (Eph. 3:9; 5:32). This would include everything from the Church’s calling to its practical arrangements for the saints meeting together for worship and ministry. The Church itself is not a dispensation but rather it is governed by a dispensation or house-law of God in relation to the truth disclosed in the Mystery.
The ministry of grace actually commenced with the ministry of our Lord Jesus Christ (John 1:17). But when His earthly people rejected Him, God opened the present dispensation of the Mystery in the heavenly calling of the Church with the coming of the Holy Spirit at Pentecost (Acts 2:1-4; 11:15). Believers today are being called out of the Jews and Gentiles to be part of a new heavenly thing—the Church, the body and bride of Christ (Acts 15:14; 26:17). The burden of true Christian ministry is to "further God's dispensation" by helping the saints who compose the Church to understand their heavenly calling in Christ and to live their lives in accord with the present administration of His house (1 Tim. 1:4).
The third dispensation is yet to come—"the dispensation of the fulness of times" (Eph. 1:10). This will be a special ordering of God with men during the public reign of Christ in the Millennium. The restored remnant of Israel and the Gentile nations will enjoy an earthly portion of blessing under the administration of Christ and the Church, who will reign over the universe from the heavens (Psa. 103:19; Rev. 21:10).
These three dispensations (or administrations) of God's house are vastly different. In fact, the more we study them, the more we will see how different they are. For instance, the Dispensation of the Law has to do with a people who have an earthly portion and destiny, whereas the Dispensation of the Mystery—sandwiched between the Dispensation of the Law and the Dispensation of the Fulness of Times—has to do with people who have a heavenly calling and destiny (the Church). Presently, God's dealings with the nation of Israel have been suspended (Dan. 9:24-27; Hos. 5:15-6:3; Micah 5:2-3; Rom. 11:11-24, etc.); in the meantime He is calling believers out of this world by the gospel of His grace to comprise the Church (Acts 15:14; 26:17). When the full number of elect believers are saved and brought into the Church (Rom. 11:25), God will resume His dealings with Israel and will bring a remnant from all 12 tribes into blessing (Rom. 11:26-27). The Gentile nations will also be blessed under them in Christ's millennial kingdom. Hence, there has been a change in the dispensational ways of God from Law to Grace, administered in the Mystery, and there will be another change from the administration of the Mystery to the administration of the millennial kingdom. In a coming day, when the purpose of God will be fully worked out, the kingdom will have people on earth blessed in relation to Christ, and also people in heaven blessed with Christ.
Dispensations have often been confused with ages. Some have tried to homogenize them and make them into the same thing. For instance, Unger's Bible Dictionary says, "A dispensation is an era of time during which man is tested." C. I. Scofield's scheme of "Seven Dispensations" is another example of this mixture. However, ages and dispensations are not the same. W. Kelly said, “The word ‘dispensation’ has no reference to a particular period or age” (Lectures on the Epistle to the Ephesians, p. 27 – footnote). An "age" is a period of time, and a "dispensation" is a moral and spiritual ordering of God during a period of time, in relation to some specific truth that He has given to His house. In accord with this, J. N. Darby spoke of being "in" an age, but "under" a dispensation (Collected Writings, vol. 10, p. 12).