Here are some excerpts from Swedenborg's "Arcana Coelestia" that help explain the inner meaning of this chapter:

AC 1985. The subject here treated of is the union of the Lord’s Divine Essence with the Human Essence, and of the Human Essence with the Divine Essence; and also the conjunction of the Lord, through the Human Essence, with the human race.

AC 1986. Jehovah was manifested to the Lord in His Human (verse 1). Foretelling the union (verses 2, 3); namely, of the Divine with the Human, and of the Human with the Divine (verses 4, 5). And that all good and truth is from Him (verse 6). The conjunction of the Divine with the human race would thus be effected through Him (verse 7). And the heavenly kingdom would be His, which He would give to those who should have faith in Him (verses 8, 9). But man must first remove his loves and their foul cupidities, and so be purified; this is what was represented and is signified by circumcision (verses 10, 11). Thus conjunction would be effected, both with those who are within the church, and with those who are without it (verse 12).

[2] Purification must by all means precede; otherwise there is no conjunction, but condemnation; and yet after all the conjunction cannot take place except in man‘s impurity (verses 13, 14). The union of the Human Essence with the Divine Essence, or of truth with good, is foretold (verses 15 to 17). Also conjunction with those who are in the truths of faith, namely, as with those who are of the celestial church, so with those who are of the spiritual church (verses 18, 19). And that the latter also would be imbued with the goods of faith (verse 20). In conclusion, these things will be effected through the union in the Lord of the Human Essence with the Divine Essence (verse 21). The end of the prediction (verse 22). It was so to be done, and it was so done (verses 23 to 27).

2040. Verse 11 And you shall circumcise the flesh of your foreskin, and it will be a sign of the covenant between Me and you.

'You shall circumcise the flesh of your foreskin' means the removal of self-love and love of the world. 'And it will be a sign of the covenant between Me and you' means that which is a representative and a meaningful sign of purity.