Application to Israel: The Lord understands the nature of Israel's vacillation. They admit to the wonders and miracles, they simply misplace credit for them. As they have idols and graven images, they more easily ascribe such things to the idols that they prefer to worship. Such idols provide the illusion of power, with none of the personal spiritual sacrifices required by the Lord.
Application to Nephi's audience: As Israel of old, Laman and Lemuel have been guilty of witnessing miracles and reassigning their power to some other source. They may not have credited idols, but they are similar to modern man in ascribing them to forces of nature or happenstance, and still effectively denying them.