Three verses: one claim and two similes. Verse 1 says that brothers dwelling together is good and pleasant. Verses 2 and 3 say what it is like, anointing oil running down a head, a beard and a collar, then mountain dew coming down onto Zion. Both images pour something at the top and deliver it at the bottom, and one verb carries them, יֹרֵד (yo-red, v.2), repeated at שֶׁיֹּרֵד (she-yo-red, v.2) and again at שֶׁיֹּרֵד (she-yo-red, v.3). The last clause is not a simile at all but a statement about a place: there, at Zion, a blessing was commanded, and its content is given in two words, life for ever. The psalm never says who the brothers are, and it never says what they were dwelling in.
Two cruxes. פִּי (pi, v.2) is the word for a mouth, in the construct state, and מִדּוֹתָיו (mi-do-tav, v.2) comes from a root meaning to measure and is used for garments, so the phrase is literally the mouth of his measures. Most translations give collar, the neck opening of the robe; a minority read it as the hem, since a garment has more than one opening and the Hebrew does not specify. The second crux is geography. Hermon stands in the far north and Zion is in Jerusalem, and dew from the one does not reach the other. The readings divide: some take Hermon's dew as proverbially heavy and the line as a comparison of quantity rather than a claim about weather, some read the mountains of Zion as standing for the land as a whole, and some emend the text. The disagreement is old and unresolved, and the verse does not give enough to settle it.
The oil is Aaron's, which puts a priest at the centre of a psalm about brothers, and readers have tied that to the one pair of brothers the Torah spends most time on, where the elder is anointed and the younger commands and neither displaces the other. The dwelling of verse 1 has been read narrowly, as brothers who do not divide an inheritance, and broadly, as any community that holds, and the Hebrew supports both because שֶׁבֶת (she-vet, v.1) is an infinitive with no subject attached to it. A third line of reading works on the descent rather than the images: the blessing is commanded at the top, in verse 3, and the psalm insists three times that things come down, so nothing in it is allowed to stay where it was first placed.
Oil and dew are the two standard images for a flow that does not diminish at its source. Oil spreads and coats and has to be poured; dew appears without anyone performing it. The psalm puts them in that order, from the deliberate act to the one nobody carries out. In the kabbalistic reading the head of verse 2 is the top of the structure and the collar is where the head meets the body, so the oil is described crossing exactly the join that any unity would have to cross. Hermon and Zion are then not two places but two heights, and the impossibility of the geography stops being a problem and becomes the point. The psalm ends on חַיִּים (cha-yim, v.3) עַד (ad, v.3) הָעוֹלָם (ha-o-lam, v.3), life for ever, which is the only thing in it that is called commanded.