He’s no longer Jacob, the usurper who tries to take his brother’s birthright and blessing. Now he’s Israel—the one who embraces God, even when it’s a struggle. The God of Bethel has been here all along, and now Israel has returned to live in the land that is the house of God. The sovereign living among his people — that’s the kingdom ideal.
But it’s not quite that straightforward. There are already people in the land: Esau to start with, and then the Canaanites. How can the kingdom of God ideal work for Israel in a world where others may not be keen to have them there? This was the major problem for the nation of Israel in the Old Testament, just as powers that refuse Jesus’ kingship have been the major threat to Christians in the last two millennia.
Israel serves as a model of how the people of God are to live among the nations. Whereas Jacob attempted to take his brother’s position and usurp his blessing, as Israel he bows seven times to his brother (33:3) and repeatedly calls him “lord” (33:8, 13-15). He looks on Esau as if he is looking on the face of God (33:10). He gives excessive gifts, reflecting God’s grace towards him (33:11). In other words, Israel expresses the character of his sovereign to his brother.
It works. The brothers reconcile. It’s probably just as well, since wrestling with God has given him a limp (32:31). Esau accepts Israel, even though there is no hint of Esau accepting Israel’s God. YHWH’s name is conspicuously absent from Genesis 32 – 37. Perhaps that’s why Israel turns down Esau’s offer for them to stay together. Esau’s destiny entails being his own nation with its own gods and kings in Seir (33:14).
Israel goes a different direction to Esau. He entered the Holy Land through the eastern entrance named Face-of-God (Penuel), so he stops to build his first house at Succoth in the Jordan Valley (33:17). Then he moves further into the Land. Yet, this is not yet holy space. The land belongs to the Canaanites, and Israel finds himself facing the city of a Canaanite prince named Shechem (33:18). How will Israel live among the Canaanites?
The key word šā·lēm in 33:18 is open to various interpretations. It could be a place name. It could mean he arrived back safely (as per his vow of 28:21). Or it could mean that Jacob behaved peacefully as he settled back among the Canaanites. The last option seems most likely since it is used in relation to the Shechemites and they use this word to describe Jacob’s peaceful attitude to them (34:21).
If that is right, the point is that Israel is behaving honourably towards the people he lives among. Like his father Isaac, he desires to live in peace (Genesis 26:29-31). Like his grandfather Abraham, he offers money to buy land (Genesis 23).
But it’s what Israel does with his purchase that is most significant. Here, in the presence of the Canaanites, Jacob builds an altar in recognition of his God, making good on his vow that “YHWH will be my God” (28:21). His purchase establishes a little piece of property in honour of Israel’s sovereign. It’s his testimony, his kingdom statement acknowledging “God, the God of Israel” (El-Elohe-Israel — 33:20).
Genesis 33 stands as a wonderful testimony of how God’s people must represent him among the other nations. As representatives of his kingship, we’re to extend God’s love to our brothers. And to our enemies.

What others are saying
John H. Walton, Genesis, NIV Application Commentary (Grand Rapids, MI: Zondervan, 2001), 612:
In the reunion conversation between Jacob and Esau, the prominent and recurring mention of God signifies the new Jacob. His children have been graciously given by God (33:5), and God has graciously provided wealth as well (33:11). Most important, however, is the reference to God that alludes to the experience of the previous night: “To see your face is like seeing the face of God” (33:10). This last is a link between the chapters that provides the key to the bottom line of this section. The old Jacob has prevailed with God and men; the new Jacob finds favor with God and men. Once the obstacle of Jacob’s character is resolved, the obstacle of conflict dissipates easily. Now that Jacob has become the man of faith that God wants him to be, he takes his rightful place as the covenant heir.
Read Genesis 33.