Just as an aside, the word significance has as its root the word sign. A sign is something that points to something beyond itself. We all recognize that whatever baptism signifies, Jesus obviously thought it was very important because He gives a command to baptize all nations in the name of the Father, the Son, and the Holy Spirit. Whatever else it is, baptism is the sign of the new covenant that God makes with His people. We do have the clear mandate in the New Testament that Christians are to be baptized.
I personally do not believe that baptism is essential for salvation. If I believed that, I would think that the thief on the cross who was promised paradise with Jesus would have been disqualified because he obviously didn’t have an opportunity to get baptized. But I do believe that baptism is essential for obedience because Christ commands it. It’s just the same thing as when people say, “Do you have to go to church to go to heaven?” I would say, “Obviously not.” But do you have to go to church to obey Christ? Yes, you do. And if you are not inclined to obey Christ and have no inclination to follow His mandates, that may be a sign that you are not headed for heaven. So church involvement becomes a very serious matter of obedience.
I would say the same about the sacrament of baptism. It’s a sign of the new covenant. It’s a sign of our participation in Jesus, of being partakers in His death and resurrection, which are at the heart of the gospel. It’s also a sign of our cleansing from sin and guilt by the work of Jesus and the washing of regeneration. What we do outwardly with water, the Spirit does inwardly with His grace. So it’s a sign of our cleansing. It’s also a sign of our sanctification. It’s a sign of our baptism of the Holy Spirit. It’s a sign of our being set apart from the world and given the holy task to fulfill the commission that Christ gives to His church.
So there are several things that baptism signifies. I think one of our tendencies is to reduce those to one—making it merely a cleansing rite or merely a sign of empowering by the Holy Spirit—when in fact it is a sacrament that is rich and complex with meaning and significance.