“this people.” Most likely Judah and Jerusalem (cp. Isa. 1:1), however, in this context it well could include all of the 12 tribes and include Israel, which was destroyed by Assyria, and then Assyria attacked Judah.
“the waters of Shiloah that go softly.” Although the reference is unclear, it seems to be a reference to the waters that flowed under and around the Temple, such as fed the Gihon spring. God is saying that the people of Judah refused the living water of the Word of God that should have been available at the Temple, they will be attacked by the Assyrians, which they were.