The Torah commands that the kohanim bless the people of Israel with a specific blessing (Sefer Bamidbar 6:22-17) –
The LORD bless thee, and keep thee;
The LORD make His face to shine upon thee, and be gracious unto thee;
The LORD lift up His countenance upon thee, and give thee peace.
The Mishna on today’s daf teaches that there are differences between the blessing as it was performed in the Temple and as it is done outside of the Temple.
They blessed the people with a single benediction:
In the rest of the country (i.e. outside of the Temple) they recited it as three blessings; in the Temple as one.
In the Temple they pronounced the Divine Name as it is written, but in the country by its substitute.
In the country the priests raised their hands as high as their shoulders, but in the Temple right above their heads, all except the High Priest, who did not raise his hands above the tzitz [the frontplate on his forehead].
While the listeners respond “amen” to each passage of the Priestly Blessing outside of the Temple, inside it was recited as a single benediction, and, according to the Rambam, the audience responded “Blessed are You Lord, God of Israel, from everlasting to everlasting.”
Due to the sanctity of the four letter Name – the Tetragrammaton – it was pronounced only in the Temple, being replaced by the term “My Lord” outside of the Temple.
According to the Ra’avad, if a kohen desires to hold his hands above his head while blessing the people outside of the Temple, he is permitted to do so. The Maḥzor Vitri forbids it, however, arguing that it appears foolish to do so, and that it is done in the Temple only because God’s presence rests upon the hands of the kohanim performing the Priestly Blessing in the Temple, and it would be inappropriate for the kohanim to hold their heads higher than the presence of God.
It should be noted that archaeologists in Jerusalem have found silver scrolls that contain the text of the Priestly Blessing dating to the First Temple period.