A distinction should be made between varna and jati, only the latter meaning caste.
The significance of the caste system is briefly outlined here:
1. Initially was meant for the division of labour in society
2. Initially was never meant to be hereditary
3. It helped India to tide over foreign invasions and maintains its integrity over 5000 yrs of its civilization.
4. The Brahmins were the first to study the language of Sanskrit and find out the metaphysical truths of the universe for which they had to do practice severe austerities and had to live in an unostentatious lifestyle. The kshatriyas defended the society against invaders and brought political stability. The vaishyas were involved in finance while the shudras did the menial and labour jobs. Thus all sections of society worked as a unit for the evolution of society.
5. Even in modern day society, higher respect is given to certain sections of society. Soldiers are given lot of respect. In that sense, they are also given certain privileges by society. Now, in India doctors are given a lot of respect. Sometimes they are also seen as next to god. This is because of the nobility associated with the medical profession. We also know of several doctors who have dedicated their lives to the service of their fellowmen.
6. However, nowadays we are also seeing a gradual degradation within the medical profession. We come across cases of medical negligence, illegal abortions, making gullible patients undergo unnecessary lab/invasive testing, irrational drug prescribing, infecting the patients due to negligence, sometimes even illegal organ transplants. This is a consequence of rampant materialism and consumerism of the society. But to be judgmental, and declare all doctors as criminals is illogical and irrational. Now, we go back to the Vedic age, where the Brahmins enjoyed similar status. They were working hard for society in the field of spirituality, they were the masters of the Sanskrit language, and ceremonies and rituals to please the gods could be performed only through them. Initially, the Brahmin was pure in thought and deed. He thought about the welfare of his own fellow men. However, the degradation of Brahmanism started later. They restricted the knowledge to themselves and the shudras were looked down upon. It should be remembered that the shudras constituted the labour class. 4000 yrs later, the laborer has still to achieve equal dignity, even in the west. If a semblance of egalitarianism exists in the developed countries, it is due to paucity of labor rather than admiration. In India where there is abundance of unskilled labor they are still looked down, irrespective of caste. Back to the Vedic age 3000 to 4000 yrs ago, the shudras constituted the largest class. However, during the initial phase of establishment of the Aryan society they never tried to learn Sanskrit and read the scriptures, which was left to the Brahmins. Thus, educationally they were considered backward and this allowed the Brahmins and other castes to dominate them. Also the number of shudras swelled because of the imbibitions of the defeated Hun and Shuka invaders among the shudras
8. Finally, i will mention that the caste system has LOST all significance. In cities, the caste is no more an important aspect. People dont care about caste whether in the workplace, in a friend;s circle or even in marriage. Some even dont know their subcaste. THe caste system although still existent in some rural areas will disappear with time for it has served its purpose.
Although Gautama Buddha preached against the caste system, it should be pointed out that monks never came under any caste system. Once a person became a monk or a sanyasin (renunciate), he was above all caste. (it was immaterial if earlier he was a brahmin or a shudra). The only person a sanyasin had to bow and respect was his own mother; for in Hindu society, for a son, his mother is God incarnate, herself.
The Buddha refuted the authority of the Brahmins and was vehemently against the ritualistic aspect of the Vedas. As such he never denounced the Vedas. He taught the Vedas in the local tongue 'Pali' instead of sanskrit which had by then been restricted to the brahmins. It was unfortunate, his followers never understood him properly; this is evident even today for there are numerous countries where people have embraced Buddhism and are yet non vegetarians.
note by MAK: however this can be justified in places like Nepal and Tibet where the resources are poor and environment is too cold and harsh for one to survive as a vegetarian
Another thing i would like to mention is being Vegetarian was never essential in Hinduism. Ahimsa was important especially after the influence of Buddha and some sects were somewhat stringent regarding being vegetarian but never was this philosphy universal.