Question: "What is the purpose of the thousand-year reign of Christ?"
Answer: The Millennium (also known as the Millennial Kingdom) is the 1000-year reign of Jesus after the Tribulation and before all the people of the world are sent to heaven or hell. Jesus will reign as King over Israel as well as all the nations of the world (Isaiah 2:4, 42:1). The world will live in peace (Isaiah 11:6-9, 32:18), Satan will be bound (Revelation 20:1-3) and, at the beginning, everyone will worship God (Isaiah 2:2-3). The purpose of the 1000-year reign is to fulfill promises God made to the world that cannot be fulfilled while Satan is free and humans have political authority. Some of these promises, called covenants, were given specifically to Israel. Others were given to Jesus, the nations of the world, and creation. All of these will be fulfilled during Jesus' 1000-year reign.
The Palestinian Covenant, also called the Land Covenant (Deuteronomy 30:1-10)
God has already fulfilled the personal aspects of the Abrahamic Covenant; Abraham did go to the Promised Land, he did have many descendants, and he is the forefather of many nations. Several hundred years after Abraham, Joshua led the Israelites to claim ownership of the Promised Land. But Israel has never possessed the specific boundaries that God promised in Genesis 15:18-20 and Numbers 34:1-12. Not even Solomon ruled over this particular area (1 Kings 4:21-24). Although he did reign from the River of Egypt to the Euphrates, he did not hold the area from Mount Hor to Hazarenan (Numbers 34:7-9)—into present-day Lebanon and Syria. In addition, the covenant God made with Abraham was that he and his descendants would have the land for eternity (Genesis 13:15, 17:8; Ezekiel 16:60). The current Israeli state may be a step in this direction, but they still do not possess the boundaries God laid out.
The Davidic Covenant (2 Samuel 7)
God's covenant with David was that his line would never die out and that David's heir would sit on the throne of Israel forever (2 Samuel 7:16). Biblical scholars agree that Jesus is the fulfillment of this covenant—one of the reasons His genealogy is given for both His step-father (Matthew 1:1-17) and His mother (Luke 3:23-38). The Jews understood this when they laid down palm branches and their cloaks as Jesus rode into Jerusalem (Matthew 21:1-17). They expected Him to be a military/political leader that would liberate them from the Romans and make Israel a great nation again. But they didn't understand the nature of Jesus' work at the time was for the New Covenant, not the Davidic Covenant. The 1000-year reign will be the beginning of Jesus' eternal reign over Israel and the earth (Revelation 20:4, 6).
The New Covenant (Jeremiah 31:31-34)
The work of the New Covenant—Jesus' death and resurrection to reconcile hearts to God—has been accomplished. But we have not yet seen the complete fulfillment. Jeremiah 31:33 says, "But this is the covenant that I will make with the house of Israel after those days, declares the LORD: I will put my law within them, and I will write it on their hearts. And I will be their God, and they shall be my people." Ezekiel 36:28 gives more specifics: "You shall dwell in the land that I gave to your fathers, and you shall be my people, and I will be your God." Isaiah 59:20-21 explains that this covenant is possible because of the Redeemer, and the reconciliation He provides will last forever. This covenant does not mean that every Jew will be saved. But it does mean that Israel as a nation will worship their Messiah. The Old Testament prophets who spoke of this covenant, including Isaiah, Jeremiah, Hosea, and Ezekiel, all wrote that it will be fulfilled in the future. From their time on, Israel has yet to be an independent nation that worshiped its Messiah (Romans 9-11). They will be in the 1000-year reign.
Those are the covenants God made with Israel that are to be fulfilled in Jesus' 1000-year reign, but the Bible lists other promises that will be fulfilled. God promised Jesus He will make His enemies a footstool, and that Jesus' followers will worship Him freely (Psalm 100). God promised the nations of the world that they would live in peace with Jesus as their ruler (Daniel 7:11-14). And He promised creation that the curse would be lifted (Romans 8:18-23), animals and the earth would be restored to peace and prosperity (Isaiah 11:6-9, 32:13-15), and people would be freed from disease (Ezekiel 34:16). These, too, will be fulfilled during the 1000-year reign.
The main purpose of Jesus' 1000-year reign is to fulfill the prophecies given to Israel and the promises made to Jesus, the nations, and the earth. God's covenants were voluntary and one-sided. He promised He would bless Israel and restore the world in specific ways, and He will.
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