I once heard professor Bruce Waltke describe wisdom as "skill in living," and that is as helpful a three-word definition as I know. Knowledge of truth is one thing, but the application of it to a concrete situation takes skill, by which I mean a spiritual acumen. There are some harmful ways to apply truths, and I have employed some of them with unhappy results.
I remember the time there was a Christian couple who visited my mother so often that she complained about it to me. I wrote them a letter that I thought careful and gentle, and that I hoped would protect the relationship. I quoted Proverbs 25:17:
"Let your foot be seldom in your neighbor's house, lest he have his fill of you and hate you."
Bad move. All that succeeded in doing was alienating the couple from me, a scar still not fully overcome. They went on to have a warm relationship with my mom that continues to this day. They didn't need my interference.
The fact that wisdom and truth are not identical is another way of saying that effective Christianity involves knowledge on three fronts: the Normative (Word of God), the Situational (adequate grasp of the situation), and the Existential (understanding of how people tick). The counselor worth his salt is a student of all three.
When the Jews asked John the Baptist what they should do to be saved, he could have said "Believe!"-and that would have been ideal elsewhere. But, sizing up his particular audience's needs, John (like James' epistle) chose to emphasize the doing of righteousness that is the evidence of vital faith (Luke 3:10-14). When the Samaritan woman at the well started going off on a misdirected tangent about water, Jesus decided to shift the direction of the conversation, and asked her about her husband (John 4:14-15).
There are a hundred possible things you can say in a conversation, but maybe only one or two measure up to the moment. Let us ask the Lord for Christ's help in speaking as we ought.