The Lutheran Confessions at times speak of the Sacraments as "signs". Philip Melanchthon writes in the Apology of the Augsburg Confession, "The sacraments are not only signs among men, but signs of God's will toward us; so it is correct to define the New Testament sacraments as signs of grace. There are two parts to a sacrament the sign and the Word." (Apol. XXIV)
I think Melanchthon is saying that in a sacrament we must distinguish between two things: the sign and the Word. So what is the sign, and what is the Word?
In baptism water is the sign. In the Lord's Supper the sign is the bread and wine. What does it mean to say that the water in baptism is a "sign"? In what way can we call the bread and wine in the Lord's Supper a sign?
This is difficult and fraught with danger since in the United States of America the most popular view of the sacraments comes out of the Reformed tradition of the Church. Especially prevalent in American Evangelicalism is the idea that the sacraments themselves are merely signs or symbols of some other reality.
In contrast to this Lutherans, along with those in the vast majority of Christian traditions, view the sacraments as acts of God. A sacrament is "God at work," as one pastor has put it. In Baptism, in the Lord's Supper, God is doing something to you.
Yet there are still signs within the sacrament themselves. So this is the distinction that must be made: water is a sign, but Baptism is not. Bread and wine are a sign, but Communion is not a sign. It is the thing itself.
A sign in the sacrament is the thing that is seen, the tangible object. In baptism that is the water. In Communion it is the bread and wine. But to these signs God has added His Word. He has put a promise in the water. He has mixed the covenant of His blood in with that wine.
The water in baptism is a sign. All we see in the font is normal H2O. Yet to this everyday, ordinary, tap water God adds the promise that those who believe and are baptized shall be saved (Mark 16:16). He attaches the guarantee that our sinful nature dies and a new man is resurrected to live before God in righteousness forever (Romans 6:1-11). So God is active in this sacrament. He is forgiving your sins, washing them away by the power of His Word, yet the water remains water.
An analogy can be drawn from the words of the angel to the shepherds in Luke 2:11-12. "
The sign, that which is seen, is the baby lying in a manger. From all outward appearances He is nothing extraordinary; a baby like any other. The promise is that this baby is Christ the Lord. Because God is present in this child He is much more than He appears. This thing that is so seemingly fragile and weak is actually the most potent and powerful being in the universe because God is at work in Him.
The thing seen is the water. The promise is that in that water our sins are forgiven and we are reborn by the power of the Holy Spirit. God is present in this water with His Word making us new.
The thing seen is the bread, the wine. The promise is that in, with, and under this is the body and blood of Jesus granting the forgiveness of our sins and fellowship with God and His Church. God is present in this bread and wine feeding us with the very sacrifice that accomplished our salvation 2000 years ago.
God gives signs so that His people can be certain they have actually received a gift. God could simply tell us that His body and blood is located somewhere in a certain vicinity or that rebirth by the Holy Spirit will happen eventually. But He likes to be more specific and concrete than that. To that end He gives us signs in the sacraments that we may see and feel and taste when God is at work.
When the water washes over you it is certain that God is cleansing you of your sins, putting to death the sinner and raising to life a new saint. When you taste the bread and wine it is unmistakable that the body and blood of Jesus is entering into you and giving the very redemption that it earned.