The blue lotus, Nymphaea caerulea, is a water lily and not a lotus, a misnaming inherited from Greek writers that has never been dislodged. It is the most frequently depicted plant in Egyptian art.
Its symbolism is solar and regenerative, and it rests on an observation anyone could make: the flower closes and sinks at dusk and opens again on the surface at dawn. Egyptian cosmology took that as the image of the sun emerging from the primeval waters, and in one creation account the young sun god rises from a lotus. From there it becomes an emblem of rebirth, which is why it appears throughout funerary material, held by the dead, strewn on coffins, and named in the Book of the Dead in a spell for transformation into a lotus.
In life it appears at banquets. Guests are shown holding a flower to the nose, sometimes with a second tucked into a wig, and the scenes are conventional enough that the gesture clearly meant something. It was also used in perfume and in unguent, and its scent is genuinely strong and sweet.
Nefertem, the god of the lotus and of perfume, is depicted with the flower on his head, and the plant is bound up with the imagery of Osirian resurrection more broadly. Whatever else it was, it was among the most saturated symbols in Egyptian religion.