...to come up through the water, so that they might be made alive; for they could not otherwise enter into the kingdom of God (John 3:5), except by putting away the mortality of their former life...they go down into the water dead, and come out alive." (9, 16, 2).Among modern commentators the dominant position is still that Jesus is talking about baptism here. But there are some dissenters in recent years who say that we should not read water baptism into the text. There is no strong consensus as to the actual meaning of the text among the dissenters but they are united in their belief that it's not talking about baptism.
But if you keep in mind that the Gospel of John was not originally divided into chapters and verses the meaning of the text seems pretty clear. In John 1:26, John the Baptizer says he baptizes with water but a greater one is coming. In 1:29-34, John the Baptizer says that the Holy Spirit descended upon Jesus at the baptism of Jesus and that this indicates that Jesus is the one who baptizes with the Holy Spirit. In John 2 Jesus changes water into wine. Then in John 3, Jesus says you must be begotten of water and the Spirit. It's really difficult to escape the idea that Jesus' is speaking of a baptism of water and Spirit. The Greek itself suggests that the water and Spirit are tied to a singular event. In Greek, if they were separate it would more likely say "the water and the Spirit" rather than just "water and Spirit."
John 3:6 says that which is born of the flesh is flesh and that which is born of the Spirit is spirit. Jesus is saying that Nicodemus does not need to go back inside of his mommy's tummy but rather needs to receive this water baptism which through Christ's Words is joined with the Holy Spirit.
There are a variety of ways that people try to get around the plain and traditional meaning of these words. Some will refuse to give a positive explanation but just insist that it cannot mean baptism. The most common explanation that I've come across recently is that "water" refers to the amniotic fluid and birthing process--that which is born of the flesh, while the Spirit refers to the spiritual rebirth. This is problematic and actually rather silly when you start thinking about it. First of all, there is no evidence that Jews thought of the birthing process in terms of water. Second of all, this would seem to imply that Nicodemus was right and he really did need to crawl back inside of his mommy's tummy. The question is about how to be born again. Nicodemus had already gone through physical birth, so if this is part of what needs to happen in order for Nicodemus to be born again then he has to go back inside his mommy's tummy. If Jesus had said, "You do not need to be born of water, you need to be born of the Spirit" there might be a possibility that this interpretation is correct but that's the opposite of what Jesus says. Trying to create an artificial parallelism between verses 5 and six just isn't very helpful.
Right after the conversation with Nicodemus, we learn that Jesus is baptizing people (3:22-30). We know from the other Gospel narratives that Jesus Himself did not baptize but baptized people through His disciples. If what Jesus said to Nicodemus had nothing to do with baptism, why would he then start baptizing people?
Lastly, I don't think anyone who believes that baptism is just some symbolic act would ever say what Jesus says when someone asks about what it means to be born again. They wouldn't mention water at all. I think we should be suspicious of anyone who explains a text in such a way that you know that that person would never say what the Biblical authors said.
Baptismal regeneration is not some doctrine of demons. To confess baptismal regeneration is to cling to Christ's very Words. If clinging to Christ's words is Satanic, what does that make Christ? Those who deny Christ's words are not "bible-believing" Christians, they are following the traditions of men. Christ promises the forgiveness of sins and the Holy Spirit in baptism. He promises to make us begotten from above. What wonderful news!