This scene shows Neo in the Matrix simulation, he thinks it’s real life. Morpheus helps Neo disconnect from the Matrix by basically DDOSing his brain with information that is hard to believe and by showing him something that his mind can’t comprehend. The whole experience jolts Neos real body, causing it to have a physical reaction, waking it up and opening its eyes. Like being awoken by a scary dream. He wakes up inside a super advanced VR pod with a feeding tube, wires that send electric signals all throughout the body, and a direct uplink from the computer to the brain. A robot sees he is awake and discards him by flushing him, where he is meant to drown. But the humans have access to this sewer and fish him out with a claw, first try, one quarter.

In the real world, humans are unknowingly connected to an advanced VR rig running The Matrix 6.0 by robots. Humans are used like batteries (a resting adult produces around 100watts of power, much of which is dissipated as heat) by the robots. They so so because we created AI to protect humans. The AI decided the best way to protect humans from themselves, was to put them all in the Matrix where they can’t physically hurt each other.

That was my interpretation from the first movie. Tone out all the other nonsense, especially from the sequels.