What does Matthew 10:29 mean?

Jesus has just declared to the apostles that they should fear most of all the one who is able to destroy both body and soul in hell (Matthew 10:28). The main thrust of His point was that we ought to be more concerned with God, and His will, than with the opinions or attacks of worldly people.

Now, Christ adds that a proper relationship with God does not rest solely on fear of God's power to destroy. It also springs from confidence in God's care. Christians should trust Him because He is watching and aware of them and will provide for them—even up to and through the point of death.

Jesus illustrates this by describing God's care for sparrows. God created every form of life on earth, including the lowly sparrow. In Israel at this time, one could buy two sparrows for a penny. Luke's gospel mentions a volume discount of five sparrows for two pennies (Luke 12:6). The poorest of Israelites consumed sparrows for food. They had very little value in the culture. Still, not a single sparrow dies without God knowing it. He is ever and always aware of all He has created.

The point is that if God cares about sparrows, He obviously cares about His own people more. They surely will not fall to the ground without the Father knowing and caring. This does not mean God will always prevent harm from coming to His children (Matthew 5:3–12). Confidence comes to believers in knowing that nothing happens without God's knowledge and care: hard times are not a sign that God has forgotten us.

Jesus refers to God here as "your Father," making clear to His apostles that God sees them as children who are in a personal relationship with Him. They need not fear the wrath of the persecutors, because their Father God is watching and will be there for them, even if they die.