Professional Answer: The most important physical significance of characteristic impedance is its role in impedance matching. When a transmission line is terminated with a load impedance that is equal to its characteristic impedance, there are no signal reflections. This is crucial for efficient power and signal transfer, as all the energy from the source is absorbed by the load. Conversely, an impedance mismatch causes reflections, which can lead to standing waves, voltage fluctuations, and signal distortion.