Postcolonial theory as a general term comes from literary theoretical movements in the late 20th century that attend to questions of power dynamics, especially between an imperial metropolis and its peripheries; between colonial centers and margins; and it’s questioning the relationships of imperial power and also how they end up being negotiated—especially discursively, especially within texts, especially within art, especially within literature—and that’s its attendant focus.
But, the reason that it matters for biblical studies is multi-fold. First of all, and long before postcolonial literary theory became big in the US academy in the 70s, 80s, and 90s, biblical scholars had noted the import of various empires in shaping biblical material—whether that’s Assyrian or Babylonian empires, in the context of the Hebrew Bible, the Persian empire, but especially Hellenistic and Roman empires.
Now what happens with postcolonial theory is that it provides a set of questions, not so much particular reading methods, but a set of questions that really focus on issues of power, identity, and the ambivalence that is inherent in the colonial exchange.
So, postcolonialism and biblical interpretation provides a set of questions that can direct us to thinking about not just how imperialism and contestation of imperialism mattered in the ancient world but also how imperialism and anti-imperialism show up in modern uses of biblical material; and more than that, postcolonialism also presses us to question the very foundations of biblical studies as a field, the way that certain strains of archaeology came to exist in the ancient Near East because of European imperial power and practice; and so it raises us to even question the constructions of the field in a fundamental level.