What does born of water mean? The range of interpretations is wide and there is no clear consensus.
(1) This interpretation says that in using the phrase born of water Jesus was referring to water baptism or Christian baptism as we practice it today.
Gangel comments that "No less a scholar than Westcott argues for baptismal regeneration from a text like this. Borchert (NAC-Jn) and Luther do not, but they see the water as the act of baptism."
Carson has an excellent argument against this interpretation writing that "If water = baptism is so important for entering the kingdom, it is surprising that the rest of the discussion never mentions it again: the entire focus is on the work of the Spirit (v. 8), the work of the Son (vv. 14–15), the work of God himself (vv. 16–17), and the place of faith (vv. 15–16)....The Spirit plays a powerful role in John 14–16; 20:22, but there is no hint of baptism.....The entire view seems to rest on an unarticulated prejudice that every mention of water evoked instant recognition, in the minds of first-century readers, that the real reference was to baptism, but it is very doubtful that this prejudice can be sustained by the sources. Even so, this conclusion does not preclude the possibility of a secondary allusion to baptism" (PNTC-Jn)
Constable - According to this view spiritual birth happens only when a person undergoes water baptism and experiences regeneration by the Holy Spirit. Some advocates of this view see support for it in the previous reference to water baptism (1:26 and 33). However, Scripture is very clear that water baptism is a testimony to salvation, not a prerequisite for it (cf. 3:16, 36; Eph. 2:8–9; Titus 3:5). In addition, this meaning would have had no significance for Nicodemus. He knew nothing of Christian baptism. Furthermore Jesus never mentioned water baptism again in clarifying the new birth to Nicodemus.
Steven Cole - Some think that it refers to Christian baptism. But Christian baptism didn’t exist at that point. Jesus was trying to explain things to Nicodemus, not confuse him with a doctrine which he knew nothing about. Also, to teach that sprinkling water on an infant causes the new birth would be to say that religion saves a person, which is the opposite of what is being said here!
J M Boice - Unfortunately, this is not substantiated either by the text or by biblical theology. The text says nothing at all about baptism, and the Bible elsewhere teaches that no one is saved by any external rite of religion (1 Sam. 16:7; Rom. 2:28–29; Gal. 2:15, 16; 5:1–6). Baptism is a sign of what has already taken place, but it is not the agent by which it takes place.(Boice - The Gospel of John)
Edwin Blum - This view contradicts other Bible verses that make it clear that salvation is by faith alone; e.g., John 3:16, 36; Eph. 2:8–9; Titus 3:5. (Bible Knowledge Commentary)
Kenneth Wuest - Others interpret the word “water” as referring to the rite of water baptism. But we submit that this is pure eisegesis, reading into the text something that is not there. Surely, the word “water” in itself, does not include within its meaning the idea of baptism. Furthermore, the only proper recipient of water baptism is one who has already been born again, the new-birth preceding water baptism, not the rite preceding the new birth. Again, the question arises as to how such a supernatural change as regeneration produces, could be the result of a mere ceremony.
As you can see, many "interpretations"
