Literary: From the standpoint of the construction of an oral presentation, the first sentence of this verse would have followed the last sentence of the previous verse - and in most rhetorical modes would have been followed by some for of pause. The rhetorical question sets up the intention that the audience ponder the reason, and the “know ye not that he was holy” reinforces the theological problem. Nephi’s technique in this discourse is to highlight the incongruity before solving it. By so doing, he more fully engages the interest of the audience, precisely because he has presented a difficult problem - why should one who is holy be baptized?
In this context it is also very important to remember the probably meanings of baptism to Nephi and his people. If their “baptism” held the concept of ritual washing for ritual cleanness, the contrast of the “holy” to the “baptism” becomes another of the difficult questions. The question becomes “why should one who is already ritually clean perform the rite of ritual cleansing?”
Scriptural: The answer Nephi gives requires Nephi’s understanding of the nature of Jesus. More than the modern LDS who understands the pre-mortal role of Jesus as Jehovah, that identification between Jesus and Jehovah was paramount for Nephi. While modern LDS theology has a strong definition of the Father as apart from Jehovah, Nephi would have had no cultural/religious background that would have made that distinction. Jehovah is the God of the Old Testament, and while Nephi demonstrates an understanding of the distinction between father and son, he nevertheless could not help but have a stronger emphasis on the Jehovah role of the pre-mortal savior. In a very real sense, Nephi’s God was made flesh and came to earth.
Nephi’s answer to the reason for Jesus’ baptism is couched in terms of this shift in sphere for Jesus. God remains in heaven, and remains the ultimate authority. However, Jehovah has now come to earth, and is both among men, and in the flesh. Thus Nephi has three phases to Jesus’ reason:
“he showeth unto the children of men”
Jesus is among men, but is yet the incarnation of Jehovah and the predicted Messiah. As such he might be considered as more than man, yet his actions are directed to mankind. He serves as an example for all mankind.
“that, according to the flesh he humbleth himself before the Father”
This alteration of position is emphasized here. Nephi emphasizes that Jesus is “in the flesh,” that he is a mortal man, whatever his previous and future position. It is in the flesh that he elects to humble himself before the Father. The emphasis here is on the voluntary humbling, a status presumed of humans, but not of Jehovah. The Israelites would not have been able to conceive of Jehovah humbling himself, but in this condition of flesh, Jesus/Jehovah does what is proper for one in the flesh, and humbles himself before God. This example of the incarnate Jehovah (one in no need of deference to God) shows to all men their absolute necessity of deference to God. Of course the deference to a God the Father who has eternal position superior to that of Jehovah is also implicit here.
“and witnesseth unto the Father that he would be obedient unto him in keeping his commandments.”
The direction of the first two points was horizontal, that is, to other men. In this point Nephi emphasizes the vertical direction, that Jesus must witness to the Father also. Thus Jesus becomes an example to men, but yet is still under personal necessity of obedience to the Father. Not even Jesus, the incarnate Jehovah, can avoid the responsibility of obedience.