There are different ways to approach the regular debates and confusions about baptism. One way I've found helpful lately is to ask the Scriptures, "What does baptism do?" When we look for God's answer to this question, we also get a clear sense of the why behind baptism.
First, baptism confirms us as participants in the covenant of grace. In the great commission, Jesus tells us that baptism is a naming ceremony (compare Mt. 28:19-20 with Num. 6:27!). In baptism, we receive the family name, "Father, Son and Holy Spirit." Different from the more common view, it has little to do with a person's confession of God and everything to do with God's testimony that this person belongs to the church, the covenant people. Both circumcision in the old covenant and baptism in the new covenant indicate God's claiming of a person, His confirming that a person belongs to the people of the covenant. Ephesians 4:4-5 hints at the confirming character of baptism when Paul writes, "There is one body and one Spirit …one Lord, one faith, one baptism, one God and Father of all, who is over all and through all and in all."
Second, baptism conveys, as a sign, the covenant of grace. God could have simply confirmed our place in the covenant with words, but He does with a visually arresting symbol, a symbol which isn't random at all. In the sprinkled and poured waters of baptism, we are reminded of the way we approach God "...with a true heart, in full assurance of faith, with our hearts sprinkled clean from an evil conscience and our bodies washed with pure water." (Heb. 10:22) Baptism preaches the whole covenant to us as often as think upon it: it proclaims God's claiming of us and grace toward us, our own sinfulness and need for cleansing, the powerful washing by Jesus' blood, and even our resurrection through Jesus' resurrection (Rom. 6:1ff). Baptism conveys the need for resting in Christ alone for salvation and the promise of that salvation for all who have faith in the risen Savior.
Third, baptism confers the grace of the covenant to us. In places like Romans 6:1-4 and Colossians 2:11-12, Paul speaks about the outward sign of baptism and the inward realities of baptism simultaneously (the relationship between the sign and the thing signified is so close that the Bible often speaks of one with the language of the other). In these passages, we see what the Westminster Confession teaches: “the efficacy of baptism is not tied to that moment of time…[however] by the right use of this ordinance, the grace promise is not only offered, but really exhibited and conferred, by the Holy Ghost…to such as that grace belongs to…” (ch. 28). You might think about both sacraments as seeds sown, watered and tended by the Holy Spirit, brought to full fruitfulness in His good timing.
(The difference between this point and sacramentalism is important. While baptism is a genuine means of grace for the elect, the working of the Spirit and the exercising of faith is always necessary for baptism to confer the grace of the covenant.)
Finally, baptism calls us to Christ and His covenant. Our baptism is a constant reminder of our covenant identity (Mt. 28:19-20), of the power of Christ's death and resurrection (Rom. 6:1) and our need to live by faith in Him. While baptism is a one-time event in a person's life, we should always consider our head to be spiritually wet long after the water has dried, allowing our baptism to preach the covenant and call us daily back to the only Savior of mankind.
Maybe in the end we marginalize baptism because it’s so concrete, because it draws a line in the sand. Once someone is baptized, a new identity is given which can’t be shaken off easily. Witnessing a baptism demands us to decide one way or the other: do I believe Jesus? Being baptized means putting ourselves forever in God’s debt, making the story of the gospel the main story of our life. And being baptized makes demands upon us. It’s not like a sermon we can discuss at lunch and forget by dinner. Baptism calls us to the life of a disciple.