The significance of this case is that it helped to establish the idea that school officials have more leeway to search their students' belongings than would be allowed if they were not in a school setting. However, the case also established that this right did not extend to the actual bodies of the students.
This was a case about what use could be made of drug-sniffing dogs at a school. The Court held that the dogs could be used to sniff any and all belongings without violating the students' constitutional rights. This is much more than would be allowed in a non-school setting. The reasoning is that school officials have a duty to protect their students and maintain a school atmosphere that is conducive to learning. The Court also ruled, however, that the dogs could not sniff the students themselves because that would be both A) a search and B) unreasonable.
So, the overall significance of the case is that it helped to establish the idea that school officials have wide (but not unlimited) latitude to conduct searches in a school setting.