When a leader is granted the rare opportunity by God to ask for absolutely anything, his choice exposes the deep connection between his inner thoughts and his true desires. God acknowledges that the specific request made by the king [מצודת דוד] was firmly rooted in his heart. Because this interaction occurred during a dream, a natural question arises: how can a person be praised for a subconscious vision, which is driven by imagination rather than a conscious, rational choice? The answer is that a dream simply mirrors a person's waking thoughts. The fact that this desire surfaced while he slept proves his mind was constantly focused on it during the day. It reveals exactly what preoccupied his innermost thoughts [מלבי״ם] and demonstrates a genuine, deep-seated reverence for God [רש״י].
God then details the worldly desires the king passed over. He did not ask for material wealth, which includes movable property, flocks, herds, and fields [מצודת ציון]. He did not ask for the defeat and downfall of his enemies [רש״י, ביאור שטיינזלץ], nor did he request a long life [ביאור שטיינזלץ].
This restraint highlights the true magnitude of the king's choice. Under normal circumstances, it is improper for a person to ask God for excessive material abundance, though one may ask for spiritual wisdom without limit. However, because God had explicitly invited him to ask for whatever he wished, the king had full permission to request massive wealth. His true praise lies in his decision to leave behind all worldly pursuits in favor of wisdom [חומת אנך].
Furthermore, he did not seek general knowledge. Ordinary wisdom can easily be used to gain personal riches, status, and the respect of others. Instead, he focused his request entirely on the ability to judge and lead the people fairly. His ultimate goal was to sanctify God's name. He hoped that when the nation witnessed their leader judging with true justice, they would naturally praise and elevate God for appointing such a wise and righteous king over them [חומת אנך].