There is a story that states the significance of this Eid. Allah challenged Prophet Ibrahim, the friend of Allah and the father of Prophets. Ibrahim had to prove his faith in Allah.
God had granted Abraham a son named Ishmael after many years of deep prayer. When Ishmael reached (the age of) (serious) work with him, God decided to test their faith in him.
Abraham had a recurring dream, in which God was commanding him to offer up for sacrifice – an unimaginable act – his only son Ishmael.
Abraham knew that the dreams of the prophets were divinely inspired, and one of the ways in which God communicated with his prophets. When the intent of the dreams became clear to him, Abraham decided to fulfill God's command and offer Ishmael for sacrifice.
Although Abraham was ready to sacrifice his dearest for God's sake, he could not just bring his son to the place of sacrifice without his consent. Ishmael had to be consulted as to whether he was willing to give up his life in fulfillment of God's command.
Abraham presented the matter to his son and asked for his opinion about the dreams of slaughtering him.
He said “O my son! surely I have seen in a dream that I should sacrifice you; consider then what you see.” Ishmael did not show any hesitation or reservation