Does God Almighty's encompassment mean the comprehensiveness of His mercy, knowledge, and power, or His encompassment by His essence of all His creation while being above them and separate from them, or both? And is it sufficient to say that God encompassed His creation in a manner befitting His majesty?

Allah the Almighty encompasses all things in knowledge and power, as He said: (that you may know that Allah is over all things competent and that Allah has encompassed all things in knowledge) [Al-Talaq/12].

And Allah Almighty's encompassing of a thing means His encompassing it in power and knowledge, not a self-encompassing like the encompassing of a sphere by another sphere; for Allah the Almighty is exalted above that. He is the Self-Sufficient (As-Samad), having no cavity, and nothing of His creation encompasses His essence.

So, His saying: (And [remember] when We told you, "Indeed, your Lord has encompassed the people") [Al-Isra/60], means He encompassed them in power and protected His Prophet, peace and blessings be upon him, from their evil. They are within His grasp and do not escape His will.

And Allah the Almighty encompasses the disbelievers, and encompasses what people do, and encompasses all things, as in His saying: (And Allah is encompassing of the disbelievers) [Al-Baqarah/19], and His saying: (Unquestionably, He is the encompasser of all things) [Fussilat/54].

And this encompassing does not mean that the creations are within His sacred essence, but rather it is an encompassing of greatness, vastness, knowledge, and power. For creations, in relation to His greatness, are like a mustard seed in a human hand, and He is above all things and distinct from His creation.