In the old days, if people were expecting a special guest in their homes, they would burn beautiful smelling incense to make their house smell nice. It was a sign of utmost respect.
When the priest censes the icons, the people or other clergy members, it is an acknowledgement of how special and precious they are, and the fact that we each have Christ inside us.
Think about that the next time the priest censes you. It's a sign of how precious and valuable you are to everyone and of course, to God. It's a loving gesture.