The village blacksmith represents a key element of the Romantic period, the common man as hero. He's a common man who is all mankind:
The smith, a mighty man is he,
With large and sinewy hands;
And the muscles of his brawny arms
Are strong as iron bands. (3-6)
The smith works an honest job, working from sun up to sun down, working at his own business and not owing a single man.
There is also a soft side to the smith; "He goes on Sunday to the church" (25), and he has a daughter who sings at church. And when he thinks of his mother who has died, "with his hard, rough hand he wipes / A tear out of his eyes" (35-36). Thus the smith shows it all--"Toiling,—rejoicing,—sorrowing"--and for that the speaker praises him (37). The speaker wants to emulate this hero who works all day at the fire, completing a job every day and rejoicing in that work. Thus, the speaker believes we should all live our lives as the blacksmith does.