We recognize that the Sacraments have a visible and invisible reality, a reality open to all the human senses but grasped in its God-given depths with the eyes of faith. When parents hug their children, for example, the visible reality we see is the hug. The invisible reality the hug conveys is love. We cannot "see" the love the hug expresses, though sometimes we can see its nurturing effect in the child.
The visible reality we see in the Sacraments is their outward expression, the form they take, and the way in which they are administered and received. The invisible reality we cannot "see" is God's grace, his gracious initiative in redeeming us through the death and Resurrection of his Son. His initiative is called grace because it is the free and loving gift by which he offers people a share in his life, and shows us his favor and will for our salvation. Our response to the grace of God's initiative is itself a grace or gift from God by which we can imitate Christ in our daily lives.
(From USCCB Website)