“By this Holy water and by your Precious Blood, wash away all my sins O Lord.”
This is a short prayer sometimes recited silently by somebody upon entering the church and crossing themselves with holy water. Holy water is not a rebaptism as Church doctrine tells us that Baptism is possible only once as it leaves an indelible mark (rf. Catechism of the Catholic Church, no. 1317). It does however cleanse us of venial sin and recalls our Baptism (cf. ibid, 1668). This does not mean that the water itself is a magical thing, but this is because it has been blessed by a priest by the power of the Holy Spirit.
We see Jesus Christ gave His disciples, namely His apostles, the authority to forgive sins, heal the sick and expel demons in His Name (rf. Mark 6:7-13). It is here we see that His priests have His healing power invested in them; another example is in Saint Paul’s handkerchief and apron (rf. Acts 19:12). There is a healing power in those things blessed by a priest and holy water is one of those. Holy water causes primarily a spiritual healing, though sometimes miracles may happen as the Church teaches that the physical healings wrought by Christ were more about spiritual healing than a physical one, but that miracles often took place.
So, what about holy water? In the Old Covenant, the priests had to wash themselves before offering sacrifices to the Lord. As the Lord commanded, “And he shall take holy water in an earthen vessel, and he shall cast a little earth of the pavement of the tabernacle into it” (Numbers 5:17). This practice continued in the New Covenant even though ritualistic precepts are no longer mandated since “are a shadow of things to come, but the body is of Christ” (cf. Colossians 2:17). Like in ancient Israel, holy water is placed in a laver (rf. Exodus 30:18). Unlike in ancient Israel, when “the high priest alone” had “entered, accomplishing the offices of sacrifices” (cf. Hebrews 9:6-7), all of us now may “go therefore with confidence to the throne of grace” (cf. Hebrews 4:16).
In the Old Covenant the priest sprinkled the altar with blood (rf. Leviticus 5:9). Since Christ as the Paschal Lamb poured forth blood and water from His side (rf. John 19:34), the priest sprinkles objects and people with water instead of with “the blood of goats, or of calves” (cf. Hebrews 9:12).