Allah is saying: `Tell them, O Muhammad, about the story of
(the guests of Ibrahim.)'
(they entered upon him, and said: "Salaman (peace!)." He said: "Indeed we are frightened of you.") meaning that they were scared. The reason for their fear has been mentioned previously, which is that they noticed that these guests did not eat of the food that was offered, which was a fattened calf.
(They said: "Do not be afraid!...") meaning, do not be scared.
(We bring you the good news of a boy possessing much knowledge and wisdom.) this refers to Ishaq, as was previously mentioned in Surat Hud. Then
(He said) meaning he spoke with wonder and astonishment, asking for confirmation, because he was old and his wife was old:
(Do you give me this good news while old age has overtaken me Of what then is your news about) They responded by confirming the good news they had brought, good news after good news:
(They said: "We give you good news in truth. So do not be of those who despair.")