As one attempts to gain a more thorough and properly rooted understanding of what Jesus means with the words that have come to be designated as John 3:16, it must be borne in mind that not only are the words offered in the context of what must be a larger discourse and long-running relationship between Jesus and Nicodemus (of which the author surely provides only a small portion), but that they are offered in a political, historical, cultural, social, and theological context as well. So understanding the context will take quite a bit more than simply examining the verses that come before and after. The context is far more complex than that. Rather, the entire setting in which the words were spoken must be taken into consideration, which will allow the reader to gain an insight into the potential mindset of Nicodemus.
This is to be done so that one can understand first what Nicodemus may have thought when Jesus spoke these words, and along with that, the things to which Jesus might be referring upon speaking these words. Then, if this material has been traversed correctly, though relatively briefly (and certainly not exhaustively), the words will have a more correct and perhaps deeper meaning for the reader as well, as the way in which they fit into what it is that it is the great and over-arching plan of the Creator God for this world and for the beings that had been made in and as His image can now be properly grasped.
In the story as presented in this Gospel record, the very first thing that Nicodemus says to Jesus is “Rabbi, we know that you are a teacher who has come from God. For no one could perform the miraculous signs that you do unless God is with him” (3:2b). There is, of course, a great tradition of the giving and receiving of signs within Israel’s history. Abraham asked for a sign from his God. Moses asked for a sign that would demonstrate that the One speaking to him was truly the God of his forefathers. Gideon would request and receive a sign from Israel's God. There are numerous other instances of people asking for signs, so this was not simply limited to Jesus’ day and to the people of the time. With his statement then, Nicodemus fits neatly into this long tradition. First, he acknowledges that Jesus seems to be quite special, and then makes his reference to signs. It is worth noting that, up to this point, the record of the Gospel of John does not have Jesus performing a large number of “signs.”
What were the signs, according to what has been presented by the author, of which Nicodemus would be aware, and to which he would be making reference? In the second chapter is the story of Jesus turning water into wine, which was not only miraculous on the surface, but was also a dramatic social and cultural statement by Jesus, centered upon meal practice, that did much to upend the honor and shame culture while also forever providing a cue to the followers of Jesus and what was to expected of them (the truly miraculous occurrence was not the transformation of liquid). John reports that “Jesus did this as the first of His miraculous signs, in Cana of Galilee. In this way He revealed His glory, and His disciples believed in Him” (2:11). Following that, the Johannine narrative presents Jesus’ dramatic actions in the Temple. It was this that drew the attention of the Jewish leaders to Jesus. They said to Him, “What sign can you show us, since you are doing these things?” (2:18b)
In response, Jesus speaks about the destruction of the Temple and its being rebuilt in three days. He offered this as a sign. The reader then goes on to find that “while Jesus was in Jerusalem at the feast of the Passover, many people believed in His name because they saw the miraculous signs he was doing” (2:23). So it is possible to come to the conclusion that it is His activities in the Temple, together with the signs (symbols of Messiah-ship?) that He was performing during the feast, that prompts this particular conversation with Nicodemus.