"This is the day that the Lord has made; let us rejoice and be glad in it."
Psalm 118 is a hymn of thanksgiving for a victory in battle. It begins "O give thanks to the Lord, for he is good; his steadfast love endures forever." The mood of appreciation and joy is continued throughout, returning in verse 29 to the same statement with which it began. The statement you quote is among the most cited, chanted, and sung in all of Psalm.