The next verses explain it...
Joh 3:5 Jesus answered, Verily, verily, I say unto thee, Except a man be born of water and of the Spirit, he cannot enter into the kingdom of God.
Joh 3:6 That which is born of the flesh is flesh; and that which is born of the Spirit is spirit.
Born of water is the natural human birth...Born of the Spirit is the Spiritual birth...
Joh 3:7 Marvel not that I said unto thee, Ye must be born again.
We were already born of the water; NOW, we must be born again, of the Spirit...
Born Again refers only to the Spiritual birth...That's where Nicodemus' confusion came from...He knew he couldn't be born again of the water...So Jesus explained the 'born again' as a Spiritual birth...Being filled with the Holy Spirit...
**”Born of water is the natural human birth...Born of the Spirit is the Spiritual birth..”**
Mmm...I can see where you get that, but I don’t think that works. Because the other passages that have this water-Spirit juxtaposition clearly have Baptism in mind, not the amniotic fluid. :)
http://www.bebaptized.org/waterandspirit.htm
And note that John 3:6 goes to a new idea of “flesh”—it doesn’t repeat the old water one. If your exegesis were correct we’d rather expect “Except a man be born of water and of the Spirit, he cannot enter into the kingdom of God. That which is born of the water is water; and that which is born of the Spirit is spirit.”.
See? The “water” idea is not carried over into the next line. So I think He’s switching ideas there.