This is part of a conversation that Jesus had with Nicodemus, a Pharisee, who came to Jesus in the darkness of the night.  Nicodemus who is mentioned only in the gospel of John has an inadequate understanding of who Jesus is.  He expressed certain kind of faith based on signs; probably Nicodemus must have witnessed the miracle at Cana.  John is saying though Nicodemus recognizes Jesus as a teacher who has come from God that is not quite what faith in Jesus must be. 

Jesus said, "You must be born from above." It was not sufficient that Nicodemus was a Jew, or he acknowledged Jesus to be a teacher sent by God.   This is all good, but, in addition to this, there must be a new inner birth.  Nicodemus asks how anyone can be born again after having grown old. It is unthinkable to re-enter the mother's womb and be born again. "Can one enter a second time into the mother's womb and be born?" Nicodemus totally misunderstands what Jesus has said. Nicodemus is puzzled by all this talk of "new birth from above."  "How can these things be?" he asks. Jesus says, "Are you a teacher of Israel, and yet you do not understand these things?" As a teacher, Nicodemus ought to have understood this.   After all Ezekiel 36:26 says, "I will give you a new heart and a new spirit in you…"

This is the reason why Jesus came into the world.  To have Nicodemus understand this teaching, Jesus gently guides him through the scripture.   Nicodemus listens to Jesus talk of the bronze serpent of Moses in Numbers 21. "As Moses lifted up the serpent so shall the Son of Man be lifted up."   There is no cure for the sins of humanity, "for the wages of sin is death."  But, just as the people who were bitten might look on the image of the serpent and be healed, so may sinners look to the Savior and be cured of the sin and be saved.   This does not mean that God approved the conduct of humanity, but he had love for us- like a parent that loves the child yet disapproving the conduct of that child.    

Now Nicodemus is confronted with the most incredible fact.  As a Jew, he knew that he is loved by God because of being a descendant of Abraham.   But now, Jesus reveals that the scope of God's love and saving purposes goes beyond Jewish people.  In other words, God gave his Son not only to Israel but to the whole humanity- to every person, rich or poor, Jew or Gentile, slave or master.  As I John 2:2 says, "He is the atoning sacrifice for our sins, and not only for ours but also for the sins of the whole world."   This free and unmerited gift from God was given to us so that "to all who received him, to those who believed in His name, he gave the right to become the children of God." (John 1:12)

Like Nicodemus, with our job titles, our status in the community, our Church membership, it is easy for us to say "I know who you are."  But Jesus says, "You don't have a clue."  You may have heard about me preach on the shores of sea, witnessed a miracle and you think you can use these as evidences to logically conclude "I know who you are."   Jesus wants more than flattering remarks. He wants our life.