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Holy
Defining קָדוֹשׁ
קָדֹשׁ: to be cut off, separated, to be/become pure, sacred, holy (Jastrow Dictionary)
This "separated" quality is probably the basic meaning of the Hebrew word kadosh. Much like the English word "distinguished," which can mean both "separate" and "special," kadosh begins by meaning "separate" and ends by meaning "special" or "sacred," "holy," "elevated" (Neil Gilman, Sacred Fragments, p.229)

(א) וַיְדַבֵּ֥ר יי אֶל־מֹשֶׁ֥ה לֵּאמֹֽר (ב) דַּבֵּ֞ר אֶל־כָּל־עֲדַ֧ת בְּנֵי־יִשְׂרָאֵ֛ל וְאָמַרְתָּ֥ אֲלֵהֶ֖ם קְדֹשִׁ֣ים תִּהְי֑וּ כִּ֣י קָד֔וֹשׁ אֲנִ֖י יי אֱלֹהֵיכֶֽם׃

(1) And the YHWH spoke unto Moses, saying: (2) Speak unto all the congregation of the children of Israel, and say unto them: Ye shall be holy; for I the YHWH your God am holy.

Martin Buber, Bechirat Yisrael
God is separate from the world and transcends it, but God is not withdrawn from it. Israel must in imitating God by being a holy nation similarly not withdraw from the the world, but rather radiate a positive influence on it through every aspect of Jewish living.
Alshich a 16th century commentator elucidates this command to be holy, “The easiest thing is to hide from the world and its follies, seclude oneself in a room, and be a holy hermit. What the Torah desires, however, is that a person should be part and parcel of ‘all the congregation of the children of Israel’ - and be holy.”