We will now perform the process of "Yachatz" or breaking of the middle matzah. Yachatz means "division" in hebrew. As you may have noticed, there is a stack here of three matzahs. The middle one is now broken in half in a somewhat ceremonious fashion. One of the halves will be hidden to be searched for later as a "challenge" for the kids at the seder (in this case all of us). The other half will be returned to the stack. Traditionally the half that is returned is the smaller piece. This represents the "Lechem Ani" or "poor mans bred". We keep it in the center of the table as we retell the story of our exodus from Egypt.
An interesting excerpt from "Passover for Dummies":
People have come up with numerous interpretations for the three matzahs at the center of the table. Some say they represent the Cohens (the Jewish priests in ancient times), the Levis (who supported the priests), and the Israelites (the rest of the Jews). What symbolism you attribute to this trinity isn't all that important, as long as you are thinking about it.
During the struggles of Soviet Jewry*, a fourth piece of matzah was added to the seder plate to symbolize the struggles of Jews who were not yet free enough to celebrate the Passover. Today, some families still use that fourth matzah as a way of remembering all people who are not yet free to celebrate as they wish.
* During the Cold War much of the American Jewish Community pushed for rights of the Soviet Jews who were stuck in persecution in the USSR and who could not openly practice Judaism.
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