We must remember that most, if not all, liturgical actions have a practical side to them as well as an alegorical or spiritual meaning to them. All three answers are correct. However, the first one regarding “cutting” the wine isn’t entirely accurate.
While wine was sometimes contained in skins, it was most often contained in crocks. Ever have a plant in a crockery planter, one of those orange terra cotta thingies? YOu know that it sucks the water right out of the soil. Such it is when wine is stored in such material. The water is leeched out of it and it thickens (if left too long, it becomes like jelly). The practical side of this action was actually to “reconstitute” the concentrated, thickened or even jellied wine.
Alegorically, it represents the font of the Sacraments in the blood and water poured forth from the side of Christ.
Liturgically, it represents, as said above, the reality of humanity – represented by common water – absorbed into the vastnes of divinity – represented by the festival drink, wine. If you want to try it at home, use white wine and put it in a clear glass. Put a few drops of water into it and watch what happens. It’s pretty cool. The water remains seaparate for a few moments, making stringers in the wine, then is absorbed compeltely. At that point, the water is indistinguishable from the wine. And the recreation at the end of the world, when we shall become like God? When we become so absorbed into the Divinity of Christ that huamnity and divinity become indistinguishable.
– Fr. L.