Anytime the Church, through its divine services and mysteries, blesses water, it always brings about true purification, healing and cleansing. Many of us shower (or bathe) regularly because we feel grimy, stinky or dirty and we feel quite clean and, in a sense, "purified" after having cleaned ourselves with water. This act of cleaning our body should always be a reminder of how we need to continue to purify our souls through a life in Christ. This is done through a life of repentance, virtuously living, regular participation in the services/sacraments and through the blessed use of holy water.
It is through Christ's Church that something so simple and basic, such as water, can go beyond cleaning just the outside of our body, to touching the deepest recesses of our soul. The blessings bestowed on the water in the services are transferred to us when we touch or drink the water; grace comes to us, to bless, heal, and purify our souls.
Listen to two prayers, one from the baptismal services and one from the great blessing of the water service:
Show this water to be the water of redemption, the water of sanctification, the cleaning of flesh and spirit, the loosing of bonds, the remission of sins, the illumination of the soul, the bath of rebirth, the renewal of the spirit, the gift of adoption, the garment of incorruption, the fountain of life. For you have said, Lord, "wash yourselves; make yourselves clean; remove the evil of your doings from before my eyes"
That all who draw from it or partake of it may find in it purification of souls and bodies, healing of infirmities, sanctification of houses, and every fit benefit. For You are our God, who through water and the Spirit renewed our nature corrupted by sin...Grant to all whether they touch it or are anointed by it or partake of it, sanctification, blessing, cleansing and health.
Listen to the words of Fr. Thomas Hopko commenting on the power of Christ's sanctifying water for the world:
Since the Son of God has taken human flesh and has appeared in the world, manifesting Himself in His baptism in the Jordan, all flesh and all matter is sanctified. Everything is made pure and holy in Him. Everything which is corrupted and polluted by the sinful works of men is cleansed and purified by the gracious works of God. All death-dealing powers of the devil which poison the good world of God's creation are destroyed. All things are again made new. Through the 'prime element' of water on the feast of Theophany the entire creation is shown to be sanctified by God's Word through the same Spirit of God who "in the beginning...was moving over the face of the waters" (Gen. 1:2).
When we have our houses blessed and receive our holy water this year, may we be reminded that this water has grace in it if we are willing to use it (yes, sometimes we just let our holy water sit on the shelf for a year...) and open ourselves to what God has bestowed upon it. We do not think it is 'magical' but we truly believe that it is an aid and a medicine for our souls and bodies as Christ wills to always grant us His mercy and healing if we will receive it.