The holy water is blessed by a priest. A priest is God’s designated representative on earth, capable of giving certain blessings in a way that others can’t.
Demons don’t like holy water. Demons also don’t like the “sign of the cross”. The combination of water, blessed by a priest, and the sign of the cross (a sign they may not look upon) is a wonderful combination.
Saints have been successful at thwarting demons’ attempts by these combinations. For example, isn’t holy water also sometimes used even in exorcisms? It’s my understanding demons will feel excruciating pain if holy water comes into contact with them.
Holy water is a reminder of our baptism. Our baptism is how we died and rose in Christ. It is like…the flood…with Noah…the Church (ark) surviving…Christ’s baptism in the Jordan, and lastly, our own baptism.
It’s also the Trinity…the Trinity is an extraordinarily powerful mystery. We need to be reminded of it, constantly.
Water has been used so many times…the Wedding of Cana…water turned to wine. Water flowed from Christ’s side as a symbol of cleansing and mercy, I believe.
Then, of course, we had water turned to blood, Moses. Then, we had water AND blood issue forth from Christ’s side.
So, I see how certain things…water…repeats, and is used, having a place in the Catholic Church, to this very day!