In this writing, especially at the bottom, it appears Otis agrees with Thomas Paine and other founding fathers that Israel was mainly a republic in addition to receiving the law at Sinai. Otis believed God started government and the entire nation state were administrators of it. Israel is the only example in context and Otis isn't referring to democracy; he's referring to representative republicanism.
"Has it [government] any solid foundation? Any chief cornerstone. . . ? I think it has an everlasting foundation in the unchangeable will of God, the Author of Nature whose laws never vary. . . . Government. . . . is by no means an arbitrary thing depending merely on compact or human will for its existence. . . . The power of God Almighty is the only power that can properly and strictly be called supreme and absolute. In the order of nature immediately under Him comes the power of a simple democracy, or the power of the whole over the whole. . . . [God is] the only monarch in the universe who has a clear and indisputable right to absolute power because He is the only one who is omniscient as well as omnipotent. . . . The sum of my argument is that civil government is of God, that the administrators of it were originally the whole people."
--James Otis, The Rights of the British Colonies Asserted and Proved (Boston: J. Williams 1766), pp. 11, 12, 13, 98.