J. W. Shoenheit has some very useful words on this topic:
The “interpretation” of a Scripture is what the verse actually means in its context.
However, verses often have a much broader “application” than simply their
interpretation. For example, Colossians 4:1 has a narrow interpretation, but a much
Colossians 4:1 (ESV)
“Masters, treat your slaves justly and fairly, knowing that you also have a Master
The “interpretation” of this verse is very narrow: slave owners should treat their
slaves justly and fairly. However, the verse is not meaningless to those people who do not
own slaves, it has a broad “application” in the world, which is that people should treat
those they are in charge of justly and fairly. That “application” is fitting for bosses,
guards, parents, military commanders, etc.
We have already seen the difference between interpretation and application in
Colossians 4:1, about slave owners, and there are many other examples in Scripture.
Building Codes. A good example of the difference between interpretation and
application can be seen in Deuteronomy.
Deuteronomy 22:8 (ESV)
“When you build a new house, you shall make a parapet for your roof, that you
may not bring the guilt of blood upon your house, if anyone should fall from it."
The houses in biblical Israel had flat roofs, so God made a law that flat roofs had to
have some kind of railing so people would not fall off. The “interpretation,” of this verse
is very narrow, and applies only to people who own houses with flat roofs. But the
“application,” the instruction we get from this example, is very broad, that it is not right
or godly to build things that are unsafe and can cause injury to others, so we should
provide some kind of safety measure.