The third eye means seeing with the mind’s eye, beyond what’s visible and creating awareness. Lord Shiva also known as Thrayambaka because he has three eyes.
The three eyes represents – Sun to be his right eye, the moon the left eye while fire is his third eye. While his other two eyes indicate his activity in the physical world, his third eye in the center of his forehead looks beyond the obvious. Fire destroys evil. Evil can be anything that is harmful. Looking at a problem beyond what it actually represents helps to solve the problem and leads to successful life. For every problem if we look carefully there will be a solution. In other words, our body is capable of doing lots of things which we don’t know. To make use of our body in a good way – we need the strength and preparation. This comes from inner mind – which is third eye.
The moon: What it symbolizes: Moon on Shiva’s forehead symbolizes the “significance of mind” - where there is no mind, moon signifies the mind. It means, without mind we cannot express anything. In life we need to have a mind that helps us to understand, experience and express. The “no-mind”, infinite consciousness requires that little bit of mind to express itself in the manifest world. To express that inexpressible, that little mind (crescent moon) is on the head.