These are often described as kingly gifts, and they are, but they are not all that rare. “Frankincense and myrrh were fragrant spices and perfumes equally appropriate for such adoration and worship” (Blomberg, Matthew, 65). Often frankincense and myrrh are associated with burial (myrrh was used in embalming until the fifteenth century), but they are also associated with the anointing of a king. They would be gifts typically given at the birth of the son of a great king.
What would a poor family do with such gifts? The deist Thomas Woolston mocked this story by saying that if they had brought sugar, soap, and candles they would have acted like wise men.”
A better way of looking at the gifts is to see them in the light of two Old Testament texts which anticipate the coming messiah. Both Isaiah 60 and Psalm 72 look forward to the restoration of a king like David. When this New David begins to rule, the nations will gather to honor the king with worship him. They will groveling the dust (Ps 72:9) and give the new king gifts.
Isaiah 60:4–7 (ESV) Lift up your eyes all around, and see; they all gather together, they come to you; your sons shall come from afar, and your daughters shall be carried on the hip. 5 Then you shall see and be radiant; your heart shall thrill and exult, because the abundance of the sea shall be turned to you, the wealth of the nations shall come to you. 6 A multitude of camels shall cover you, the young camels of Midian and Ephah; all those from Sheba shall come. They shall bring gold and frankincense, and shall bring good news, the praises of the Lord. 7 All the flocks of Kedar shall be gathered to you; the rams of Nebaioth shall minister to you; they shall come up with acceptance on my altar, and I will beautify my beautiful house.
Psalm 72:8–11 (ESV)8 May he have dominion from sea to sea, and from the River to the ends of the earth! 9 May desert tribes bow down before him, and his enemies lick the dust! 10 May the kings of Tarshish and of the coastlands render him tribute; may the kings of Sheba and Seba bring gifts! 11 May all kings fall down before him, all nations serve him!
The gifts of the Magi therefore indicate Jesus is the King of Israel, the true son of David.