Water baptism for Israel

For Israel, water baptism was a matter of purification:

John 3:25-26 (KJV) 25 Then there arose a question between some of John's disciples and the Jews about purifying. 26 And they came unto John, and said unto him, Rabbi, he that was with thee beyond Jordan, to whom thou barest witness, behold, the same baptizeth, and all men come to him.

This is because in the kingdom they will all be priests... 

Exodus 19:6a (KJV) And ye shall be unto me a kingdom of priests, and an holy nation.

1 Peter 2:9a (KJV) But ye are a chosen generation, a royal priesthood, an holy nation, a peculiar people;

... and priests needed to be washed:

Exodus 29:1a, 4b (KJV) And this is the thing that thou shalt do unto them to hallow them, to minister unto me in the priest's office:...And Aaron and his sons thou shalt bring unto the door of the tabernacle of the congregation, and shalt wash them with water.