The Lord told Abram, I am the Almighty God, walk before me. He has the same message for us today. We are to obey because he is God - that is reason enough. If you don't think the benefits are worth it, consider who God is - the only one with the power and ability to meet your every need.
Twice before God had mentioned his agreement (Genesis 12 & 15). God was bringing it into focus and preparing to carry it out. He revealed to Abram several specific parts of his covenant. (1) God would give Abram many descendants; (2) many nations would descend from him; (3) God would maintain his covenant with Abram's descendants; (4) God would give Abram's descendants the land of Canaan.
God changed Abram's name to Abraham ("the father of a great multitude") shortly before the promised son was conceived. From this point on the Bible always calls him Abraham.
God was making a covenant, or contract, between himself and Abraham. The terms were simple: Abraham would obey God and circumcise all the males in his household. God's part was to give Abraham heirs, property, power, and wealth. Most contracts are even trades: we give something and in turn receive something of equal value. But when we become part of God's covenant family, the blessings we receive far outweigh what we must give up.
God required circumcision (1) As a sign of obedience to him in all matters. (2) As a sign of belonging to his covenant people. Once circumcised, there was no turning back. The man would be identified as a Jew forever. (3) As a symbol of "cutting off" the old life of sin, purifying one's heart and dedicating oneself to God. (4) Possibly as a health measure.
Circumcision more than any other practice separated God's people from their heathen neighbors. In Abraham's day, this was essential to develop the pure worship of the one true God.
Reference summary used from The Life Application Bible, Tyndale House Publishers, Inc.; Wheaton, IL