The separation of church and state is significant as it ensures that religious institutions do not exert undue influence over government policies, preserving the neutrality of the state in matters of faith. This principle promotes religious freedom, allowing individuals to practice their beliefs without interference from the government. Moreover, it protects the rights of non-believers and minority faiths, fostering a more inclusive society. By maintaining this separation, democracies can ensure more equitable representation in policymaking, as laws can be crafted based on rational discourse rather than specific religious doctrines, thus enhancing the legitimacy of governance.