In the book of James, division is one of the important theme. So from the chapter 1, he deals with the division between faith and doubt, listening and living, and personal piety and helping others. And in today's text, he continues to talk about the division between faith and works.
His point is very clear that faith apart from works is dead. This dead faith appears in two ways. First is mere words (which is lip service). And the second is mere knowledge (which even the demons have). These are not small or lack faith, but these are not faith at all.
Also James gives two examples of living faith, Abraham and Rahab. While Abraham was the father of faith to the Jews, Rahab was a gentile prostitute. It seems that James picked two very different people to show that there is no favoritism in faith as long as the faith is accompanied by works. From Abraham's example we can see that living faith is obedience. Although Abraham was justified by faith in Genesis 15, 30+ years later his faith was proved by obedience in Genesis 22. Also, a living faith is making a difference. Rahab had a faith in one true God of Israel. Has her faith saved her? Yes. She was living among the city of Jericho which would be completely destroyed. However, Joshua sent two spies despite the fact that he did not have good experience, they did not need military strategy, and the spied did nothing but being saved by Rahab. Therefore, we can conclude that God sent two spies to save Rahab, who had faith in gentile. She made a difference based on her faith. Living faith is obedience and making differences.
Knowing about what is faith and what is not is important. However, having a living faith which is accompanied by works is more important. Let's examine our faith and live it out.