What does it mean when the bible says that we are created in God’s image?
It means, first, that we have been created with an immortal spirit (God Is Immortal Spirit) and, second, that having this gift of an immortal spirit (unlike other created things) we can think and choose, using our free will which was given to us so that we may to chose the good (God) and reject evil. A corollary of this is that having an immortal soul allows us to enter into a communion of persons with others, and most particularly with the three Divine Persons of the Trinity.
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Well, I think it means that God made us like Himself. That doesn’t mean that we are equal to him. For example, when you look at yourself in a mirror, you don’t think that the person looking back at you is equal to you. In the same way, God made us to be reflections of Himself (i.e. the Holy Trinity).
In what way are we reflections of God? Well, God is infinite, we are finite. God is all powerful, we have limited power. God is all knowing, we only know some things. But even though we are just limited versions of his Eternity, we are enough like Him that we can come to know Him personally. That means that we can have a relationship with him like no other creature can (except for Angels).
During the fall (the first sin with Adam and Eve), we messed up that image of God in ourselves so we could no longer have that relationship with God. Jesus came to restore that image of God that we lost through sin so we could be with and know God again.
Hope that helps.
We have a spiritual resemblance to God: He is pure spirit, we are a composite of body and spirit, and our spirit, like his, has the faculties of intellect and will.