The word "Sacrament" is derived from the Latin word sacramentum and was used in ancient times to swear a solemn oath. The early Church adopted the word to mean any sacred rite or mysterious doctrine. Later, the word came to mean, among professing Christians, the ordinances of baptism and the Lord's Supper as Christ himself instituted these ordinances:
Matthew 28:18-20 - And Jesus came and said to them, “All authority in heaven and on earth has been given to me. Go therefore and make disciples of all nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit, teaching them to observe all that I have commanded you. And behold, I am with you always, to the end of the age.”
Luke 22:17 - And he took a cup, and when he had given thanks he said, “Take this, and divide it among yourselves.
Furthermore, sacraments are to be concluded in the corporate worship service, along with the preaching of the Word. Where as the preaching of the Word is open and applicable to all, the Sacraments are open to God's family alone (Rom 6:3-7, Acts 2:38).
Romans 6:3-7 - Do you not know that all of us who have been baptized into Christ Jesus were baptized into his death? We were buried therefore with him by baptism into death, in order that, just as Christ was raised from the dead by the glory of the Father, we too might walk in newness of life. For if we have been united with him in a death like his, we shall certainly be united with him in a resurrection like his. We know that our old self was crucified with him in order that the body of sin might be brought to nothing, so that we would no longer be enslaved to sin. For one who has died has been set free from sin.
Acts 2:38 - And Peter said to them, “Repent and be baptized every one of you in the name of Jesus Christ for the forgiveness of your sins, and you will receive the gift of the Holy Spirit.
The Sacraments are a sign and a seal. As a sign, they are physical and a pointer to a broader reality. God, in his infinite wisdom knew that we were creatures of weakness and required physical reminders by these visible symbols. In the Lord's Supper for example, we see and taste the bread and wine. This is God's Grace to us, helping our ignorance and slowness. They are very effective in stimulating our souls and confirming our faith.
Genesis 9:12-13 - And God said, “This is the sign of the covenant that I make between me and you and every living creature that is with you, for all future generations: I have set my bow in the cloud, and it shall be a sign of the covenant between me and the earth.
Genesis 17:11- You shall be circumcised in the flesh of your foreskins, and it shall be a sign of the covenant between me and you.
Also as a sign, it points to greater realities like the atonement and death of Christ. With the Supper, we also see our union with Christ and that all nourishment comes from Him. With Baptism, it signifies the regeneration and washing away of sins.
As a seal, the sacraments are a certification and confirmation of God's promises in the covenant of grace to Christ's Church (see Luke 22:19 and 1 Cor. 11:24). The Seal is a certification of His love for us. The Supper certifies our participation in the Covenant and our union with Christ. For Baptism, it is a seal of the righteousness which is imparted to us, as God's free gift:
Romans 4:11 - He received the sign of circumcision as a seal of the righteousness that he had by faith while he was still uncircumcised. The purpose was to make him the father of all who believe without being circumcised, so that righteousness would be counted to them as well,
Finally, it is important to mention that the Sacraments are in no way mysteriousness or superstitious. The Sacraments are didactic in nature, that is, they require the Holy Spirit's work to save or sanctify - there is nothing magical or powerful in and of themselves. The sacraments present truths in a visible, tangible, sensible form but only when they are accompanied by the work of the Holy Spirit, are they effective in any way.
Matthew 3:11 - I baptize you with water for repentance, but he who is coming after me is mightier than I, whose sandals I am not worthy to carry. He will baptize you with the Holy Spirit and fire.
Galatians 6:15 - For neither circumcision counts for anything, nor uncircumcision, but a new creation.
1 Peter 3:21 - Baptism, which corresponds to this, now saves you, not as a removal of dirt from the body but as an appeal to God for a good conscience, through the resurrection of Jesus Christ,
The existence of the Sacraments are yet another testimony to our Father's deep love for His children, in all the Grace, Help and Care He provides. We serve a great God indeed.