From the Insight book:
The potter’s authority over the clay is used illustratively to show Jehovah’s sovereignty over individuals and nations. (Isa 29:15, 16; 64:8) To God the house of Israel was "as the clay in the hand of the potter," He being the Great Potter. (Jer 18:1-10) Man is in no position to contend with God, just as clay would not be expected to challenge the one shaping it. (Isa 45:9) As an earthenware vessel can be smashed, so Jehovah can bring devastating calamity upon a people in punishment for wrongdoing.—Jer 19:1-11.
Concerning the Messianic King’s exercise of God-given authority against the nations, it was foretold: "You will break them with an iron scepter, as though a potter’s vessel you will dash them to pieces."—Ps 2:9; compare Da 2:44; Re 2:26, 27; 12:5.
From a single lump of clay the potter could make a vessel for an honorable use and another for a dishonorable, a common, or an ordinary use. Similarly, Jehovah has authority to mold individuals as he pleases and has tolerated wicked ones, "vessels of wrath made fit for destruction," but this has worked to the benefit of "vessels of mercy," persons making up spiritual Israel.—Ro 9:14-26.
and from a 1965 Watchtower:
6 Note how clear this point is made at Jeremiah 18:6-8: "Look! As the clay in the hand of the potter, so you are in my hand, O house of Israel. At any moment that I may speak against a nation and against a kingdom to uproot it and to pull it down and to destroy it, and that nation actually turns back from its badness against which I spoke, I will also feel regret over the calamity that I had thought to execute upon it."
7
To illustrate: All of Jehovah’s creatures might be likened to clay vessels in a potter’s workshop whom Jehovah God, as the Potter, can and does mold as he pleases. But it is up to the individual piece of clay as a free moral agent and an intelligent creature to choose how he wants to react to Jehovah’s patterns and pressures, either submitting to Jehovah and righteousness, or resisting Jehovah and hardening himself in wickedness. But once the creature has manifested his attitude, Jehovah may, can and does at times mold that one further and further, either toward honorable service or toward dishonorable use, as suits Jehovah’s sovereign will and purposes.