It is important to know that this poem personifies a lot. Cruelty is a person. Humility, Mercy, and Mystery are, too. The line that you are asking about says "he sits down with holy fears."
Okay, who is he? If a reader reads only that stanza (stanza 3), there isn't an answer. A reader must look to the previous stanza's second couplet.
"Then Cruelty knits a snare,
And spreads his baits with care."
Now we're getting somewhere. "He" and "Cruelty" are the same person. In this case, Cruelty is part of human nature. At this point Blake is beginning to describe the planting and growing of a metaphorical tree. Cruelty is sitting down to water the tree. He waters it with his tears that came from holy fears. And out sprouts humility.
"Then Humility takes its root
Underneath his foot."
What Blake is saying is that he believes the only reason that people attempt to be humble and merciful is because they have "holy fears." They fear eternal damnation if they do not act with humble kindness. It's an interesting thought, because what Blake is saying is that without the tears of holy fear to water humility, Cruelty would rule alone. That would be a scary world to live in.
William Blake's poem The Human Abstract explores the concepts of virtues and vices and breaks down our preconceived ideas of good qualities and bad qualities by suggesting that every virtue, for example Peace (line 5) is bought about by something less favorable - in these case we only have peace because of mutual fear - in essence people are too scared to get up and doing anything or voice opinions.
Personification is key to the poem - as demonstrated by the fact each virtue or vice is given a capital letter (Mercy etc), thus humanizing them perhaps as a means to represent the fact that these ideals are man made entities.
The line in question "He sits down with Holy fears" is an interesting one as this is the first time in the poem where we see a human figure, the rest of the poems focus is not on people but on abstract ideas. He can be viewed as an every man figure representative of humanity who has Holy Fears of the repercussion of actions - the idea of heaven versus hell & eternal damnation was a way to keep the behavior of the masses in line . Alternatively He can be seen as referring to Cruelty who we met in the previous stanza . This is significant as cruelty is a major feature of the poem, viewed as the hidden virtue behind the church. The use of the word "Holy" reinforces this idea of cruelty being part of the make up of organised religion. The tears used by Cruelty to plant a tree of Established Religion. The “Humility that takes its root” symbolizes the humility of the priests and religious figures that are being exploited in the poem. Further
It is worth comparing this idea to other poems within Songs of Innocence and Experience and how they present religion and religious ideals. For example in Holy Thursday or the Blackn'd churches in London which suggest a corruption. You could even look at The Poison Tree and the idea of Christian Forbearance, which suggests that some christian ideals can have sinister undertones or consequences.