“And you, Bethlehem.” This verse is quoted from Micah 5:2, but with some significant alterations that make the application to New Testament times and the Messiah more vivid. This is common with quotations; often quotations are changed such that they are better understood as long as the original meaning is not lost. For example, Micah reads “Bethlehem Ephrathah,” whereas Matthew reads “Bethlehem in the land of Judah.” Also, Micah uses “clans” (literally, “thousands”) whereas Matthew uses “leaders” who represent the thousands. Also, Micah uses the word for “rule” whereas Matthew uses “shepherd,” which fits with both the Old Testament and New Testament use of “shepherd” for a ruler.
“in the land of Judah.” Some translations read “Bethlehem, in the land of Judah” (e.g., ESV, NIV) and some read, “Bethlehem, land of Judah” (e.g., ASV, NASB). The Greek word for “land,” gē (#1093 γῆ), has the same form for the dative (“in the land”) and vocative (“O land” [direct address]) cases. The dative, “Bethlehem, in the land of Judah,” is correct; for “Bethlehem, land of Judah” does not make sense. When Joshua divided up the Promised Land, the town of Bethlehem was in the tribal territory of Judah (Josh. 15:1-12).
“are absolutely not least among the leaders of Judah.” Understanding this phrase involves understanding a custom that the leader of a city often represented the city (cp. Lenski; Hendricksen). The Author is expecting that the reader will see that the city of Bethlehem is important and eventually its leader will be the one who shepherds all of Israel, not just the people from Bethlehem. Although there is a temptation to make “leaders” into “ruling cities” (cp. NLT), that does not catch the fullness of the prophecy which combines the thought of the ruling city with the ruler himself.