This can be interpreted to mean different things. The most common way to understand it is “The guardian (God) of Israel does not sleep or rest”. As in, God always watches over his people. Or it could be a command from God to his people, “Never rest, never sleep, guard Israel” This might mean literally defending the homeland of Israel, or metaphorically defending the Jewish way of life.
I like the metaphorical reading the best. When I think of this quote it makes me proud to be Jewish. I understand that there are so many ways of living out there, and they all have great lessons in their testaments and ideas on how to lead a fulfilling life. So in that sense, Judaism is just another way of life that I happened to be born into, no more special than any other. But, I think the point of the quote for me, is that no matter what you follow or believe in, weather it’s Lady Gaga, chocolate chip cookies or art at least stand for something.