In “Dover Beach” by Matthew Arnold, what does the speaker mean when he says that the “Sea of Faith” is retreating?

The speaker means that he is always painfully aware of the gradual diminution of religious faith throughout the Western world. He uses the retreating waves at Dover Beach as an extended metaphor, or symbol, of that withdrawal. The image is appropriate because the waters he is looking at are retreating with the tide. Like the tide, the retreat of religious faith is vast and unstoppable. Arnold is obviously disturbed by society's loss of religious faith because he dreads the consequences. He is implying that everything in human civilization depends on religious belief, so human civilization is in serious danger. If people believe in God and believe that God has established laws to regulate human behavior, then if they stop believing in God in alarming numbers, they could be headed down a slippery slope.

The Sea of Faith
Was once, too, at the full, and round earth’s shore
Lay like the folds of a bright girdle furled. 
But now I only hear
Its melancholy, long, withdrawing roar,
Retreating, to the breath
Of the night-wind, down the vast edges drear
And naked shingles of the world.