What does "in the image of God" mean?

The main difference between Mankind and ”fish in the sea and the birds in the sky, over the livestock and all the wild animals, and over all the creatures that move along the ground.”

Made in the image of God vs. Made in the image of animals.

Considers justice, mercy and love vs. Considers only might.

If an animal comes upon food gathered by another animal, it will steal the food: there is thus no consideration for justice, fairplay. If it sees another animal which is steals its food, it will not spare it : there is thus no consideration for mercy, sympathy. If it sees another animal which is hungry, it will not give it food: there is thus no consideration for love, sacrifice.

It is important to note that God, the Creator of they physical universe, exists outside of the physical universe--time, space, and matter. So, God's image is not physical, so the image of God in us does not indicate that God has hands, feet, sexual organs, a stomach, liver, tonsils, etc. We are not replicas of God, but we bear His image.

God is spirit (John 4:23), so that is the part of mankind that retains His image. Humans are the only thing on earth that are not merely physical beings, but which are also spiritual beings.

Here are a few notable experts from the Roman Catholic explanation on being made in God's image, as detailed in the Catholic Catechism, starting at paragraph 356.

(356) Of all visible creatures only man is “able to know and love his creator.”219 He is “the only creature on earth that God has willed for its own sake,”220 and he alone is called to share, by knowledge and love, in God’s own life. It was for this end that he was created, and this is the fundamental reason for his dignity:

(357) Being in the image of God the human individual possesses the dignity of a person, who is not just something, but someone. He is capable of self-knowledge, of self-possession and of freely giving himself and entering into communion with other persons. And he is called by grace to a covenant with his Creator, to offer him a response of faith and love that no other creature can give in his stead.

(362) The human person, created in the image of God, is a being at once corporeal and spiritual.

That's about as concise as I think it can to be.

But, I'll try to expand on the point of self-knowledge, since some creatures and machines could be argued to be self-knowing. The best I personally can come up with is that people are capable of an "elevated" self-knowledge that I imagine depends on a spiritual-corporeal dual nature. We can conceive of "I am" without "help" and as self in a pervasive manner, rather than as a external, finite entity.

Contrast this to a "self-aware," self-improving, and self-rewriting piece of software. (Like a well-written virus.) The code could be written such that it examines itself in memory and/or on disk and continually changes itself in an attempt to make its success rate at some task (like finding your banking credentials) higher. But even here, the software has been endowed with some specific, external task -- not notions of good or bad. And the "self" that the program "perceives" as self; it's a variable that has been pointed at an object which just happens to be it's own code. It's not pervasive self-awareness; it's limited, self-manipulation.

And that's actually a good distinction, I'd say. Humans are pervasively self-aware. We can appreciate ourselves. Other creatures and things can self-manipulate or operate on themselves. But, they cannot, like a human, joyfully sit back and sigh with relief,

Ahh ... I am.

In your very question you have most of the context you require:

Then God said, “Let us make mankind in our image, in our likeness, so that they may rule over the fish in the sea and the birds in the sky, over the livestock and all the wild animals, and over all the creatures that move along the ground.”

The image of God relates to humanity's role and relationship with creation, compared to God's. God is the creator, who lovingly brings everything into and upholds it's existence. Mankind in the image of God is entrusted with the stewardship, Lordship, vice-regency, etc over creation. We are to tend to God's world, taking care of it and organising it, so that it "works" (for lack of better wording ><).

I understand God's image as this very status of being God's stewards of his world.

? why isn't it about us being 'spritual' like God is?

Well, other beings exist which are spiritual.. but not in the image of God. i.e. demons.

? why isn't it about our trait or capacity to think, reason, love, obey God, free will, xyz......?

1) Slippery slope, as then any person without capacity xyz then becomes sub-human using that definition. e.g. somebody who is not smart, somebody who is disobedient, somebody who medically cannot empathise. Depending on the capacity you choose determines who you consider to be a lesser, inferior human.

2) Angels seem to have all of the human capacities, yet are not in the image of God.

The Hebrew word for image here (tzelem) is elsewhere translated "shadow," for example "even though I walk through the valley of the shadow of death" in Psalm 23.

A modern metaphor, then, might be this: image means "projection." (The geometric kind, not the psychological kind.) Projection takes a multidimensional entity and renders it, incompletely but faithfully, with fewer dimensions. A projection is a complete and whole entity, but entirely derived from and less complex than, the original.

Literally translating, "in his image he made him, male and female he made them."

Continuing with the geometric metaphor, it is evident that God is great and complex enough to project the genders of humanity.

There are differing traditions about this. Only in Eastern Orthodoxy have I run into a very specific definition, where 'Image of God' is treated like a term of art with a specific, well defined meaning.

Generally speaking, most Christians interpret it to mean that we share in the spiritual reality with the spiritual beings, and traits specific to God (spiritual traits, since God is Spirit) belong to man. Such things then do not belong to other creatures, which may or may not include the angels. What traits these are vary from interpretation to interpretation, but they may include:

• Ability to create
• Reason
• Having a 'spirit'
• Being able to have the indwelling of the Holy Spirit

In Eastern Orthodoxy, there is a specific definition that is sometimes offered (though it does not exclude the above.)

• Each human is unique, as God is unique (being one!)
• Each human is relational, that is, he exists only in relation to others, as God is Trinity in himself and thus even if there is no other, God is 'in relation' via the persons of the Trinity
• Each human has free will, as God has free will.