The fear of the LORD is the instruction of wisdom,
and before honor is humility.
Prov 15:33

Wisdom is the ability to judge correctly and to follow the best course of action, based on knowledge and understanding. Wisdom, unlike knowledge, cannot be studied or acquired through just reading books. It has to be applied and tested.

Knowledge => Understanding => Instruction => Application => Wisdom

After the knowledge, we seek the understanding. After the understanding, we can then decide what to do with that knowledge, how and when to do it. It is applied knowledge in motion. Like a chess game, knowing the rules of the game is one thing but winning is another - which move to make at what time. Wisdom is simply doing the right thing at the right time to the right person in the right way for the right motive.

The biblical concept of wisdom is quite different from the wisdom of the world. The wisdom of the world is sought through philosophy, rational (or irrational) thinking and reasoning to determine this mystery and that mystery. But the wisdom that is from above is first pure, then peaceable, gentle, willing to yield, full of mercy and good fruits, without partiality (prejudice) and without hypocrisy (James 3:17).

The apostle Paul declared that the message of the cross is foolishness to the Greeks and a stumbling block to the Jews. But to those who believe, this "foolishness of God" is "the wisdom of God" (1 Cor. 1:18-25).

Against the wisdom of God, Paul contrasted "the wisdom of this world" (1 Cor. 1:20; 3:19), "human wisdom" (1 Cor. 2:4), "the wisdom of men" (1 Cor. 2:5), "the wisdom of this age" (1 Cor. 2:6), and "man's wisdom" (1 Cor. 2:13).

The first principle of biblical wisdom is that man should humble himself before God in reverence and worship, and be obedient to His commandments. Nothing mysterious. This principle is found especially in the Wisdom Literature such as the books of Job, Psalms, Proverbs and Ecclesiastes.

There are two principal types of wisdom found in the Wisdom Literature, namely practical and speculative.

Practical wisdom consists mainly of wise sayings that offer guidelines for a successful and blessed life. These are maxims of commonsense insight and observation about how a wise man or woman should conduct himself or herself.

The Book of Proverbs is a good example of practical wisdom. It encourages the pursuit of wisdom and the practice of strict discipline, hard work, and high moral standards as the way to blessedness and success. Proverbs is an optimistic book. It proclaims that wisdom is attainable by all who seek and follow it. It also declares that those who keep God's moral and ethical laws will be rewarded with long life, health, possessions, respect, security, and self-control.

Speculative wisdom, found in the books of Job and Ecclesiastes, goes beyond practical maxims about daily conduct. It reflects upon the deeper issues of the meaning of life, the worth and value of life, and the existence of evil in the world.

The Book of Job seeks to explain the ways of God to man. The theme of the book is the suffering of the righteous and the apparent prosperity of the wicked. The answer to such questions is that the prosperity of the wicked is brief and deceptive (Job 15:21-29; 24:24) while the righteous, although presently suffering, will eventually receive God's reward.

Like the Book of Proverbs, the Book of Ecclesiastes also contains rules for living and sayings of practical wisdom. But Ecclesiastes is more skeptical and pessimistic as it unfolds a collection of discourses and observations of life on earth. It is probably the most philosophical book of the Bible. As such, it is classified among the works of speculative wisdom.

The wisdom Psalms are similar in tone and content to the books of Job and Proverbs. Some of these Psalms struggle with evil and sin while others give practical advice for daily living.

The best biblical example of a wise man is King Solomon (1 Kings 10:4,6-8; 2 Chr. 1:7-12). However the same Bible that lavishes such praise upon Solomon for his reputed wisdom (1 Kings 4:29-34) also announces his foolishness as he turned his heart away from the LORD (1 Kings 11:1-13).

Source:
Nelson's Illustrated Bible Dictionary