Spiritual Death (1-2a): Paul returns to the topic of God's power. As He raised Jesus and seated Him in His high heavenly position, God exercised His power to deliver us from our prior spiritual condition of spiritual death (2:5-6). We were formerly "dead in [our] trespasses and sins." As disobedient sons are to their father, so we were dead to God.[1] Moreover, we were cut off from God, the very source of spiritual life.[2] We were physically alive, but spiritually dead.
Satan & the Flesh (2b-3): Now, spiritual death belongs to "the course of this world," fueled by Satan[3] himself. The Devil actively works to steer this world toward sin against God, alluring them into a lifestyle[4] of fleshly lusts. This is the pitiful animalistic lifestyle (Ps. 49:20; 73:22), bent on carrying out[5] the desires of their flesh and their godless mind.[6] They persist in a shameful and disgraceful practice of sin, being shut out from the life of God. They also heap upon themselves the wrath of God[7] both now (Rom. 1:18, 24) and in the future (1 Thess. 1:10). And this is who we all were before,[8] rebels under God's wrath. But God did the impossible. He made the spiritually dead alive. He changed us!
[1] "Trespass" is against God's law and "sin" misses His mark, hence, "disobedience" (2:2). Cf. Luke 15:24.
[2] There is a spiritual life beyond physical life (1 Tim. 5:6; 6:19; 1 John 3:15). God has this life in Himself, and Christ also (John 1:4; 5:26). God "made us alive" (2:5) in this spiritual sense. He made us into new creatures in holiness (4:24; 2 Cor. 5:17), in Christ-like obedience to the Father (John 4:34; 5:30; 8:29).
[3] Satan is "the prince [ar-chōn (ἄρχων)] of the power of the air." Jesus called Satan by this name: "ruler [ar-chōn (ἄρχων)]" (John 12:31; 16:11). The phrase "the spirit that is now working …" is appositional and it also points to Satan, who is actively enticing humans to disobedience (1 Tim. 5:15; 2 Tim. 2:26; 1 John 3:8).
[4] The verb "lived [a-na-stre-phō (ἀναστρέφω)]" (2:3) has nothing to do with "life" per se. The verb is better translated as "conducted ourselves" (NKJV) or "walked," as it describes one's conduct/behavior/lifestyle.
[5] "Indulging" is literally "continually doing [poi-e-ō (ποιέω)]". This is to keep doing whatever your flesh and your godless mind wants. As Jesus calls it, this is an enslavement to sin (John 8:34). Cf. also Rom. 6:17-18.
[6] "The mind" here is the godless mind which results in "the practice of every kind of impurity" (4:18-19).
[7] "Of wrath" (in "children of wrath") is an objective genitive. We were "objects of wrath" (NIV). Cf. 5:6.
[8] "Formerly" we were "by nature" such people who deserved wrath, but we were changed and made anew.