Baptism for the dead is a powerful evidence that Joseph Smith was a real prophet and the Church of Jesus Christ has been restored. The LDS practice has long been derided as absolute fiction and an abomination, and based on a terrible misinterpretation of 1 Cor. 15:29. However, long after Joseph Smith restored the practice through revelation, dozens of ancient documents have turned up showing that early Christians (at least some) indeed believed in and practiced baptism for the dead much as we do today. Hugh Nibley has an excellent article, "Baptism for the Dead in Ancient Times," with numerous references showing that this was a real practice in the early Church that was one of the first to be lost in the great apostasy when priesthood and temple ordinances perished. If you have Lost Books of the Bible, you can read in the Pastor of Hermas a wonderful description of the practice, though somewhat metaphorical. (See....Similitude Nine of III Hermas online; also read the Pastor of Hermas in the Early Church Fathers section of ccel.org.) This reference did exist during Joseph Smith's time, but was not widely known. There is no way he could have restored the original practice given what he knew if he were a fraud!
BTW, the modern evidence for baptism for the dead in ancient times is now so strong that a relatively new translation of the Bible, the New English Bible (published by a group of English and Scottish churches with absolutely NO LDS ties) has a footnote for 1 Cor. 15:29 saying something to the effect that modern evidence shows that some early Christians did practice proxy baptism on behalf of those who had died without baptism. (I'm 99% sure it was the NEB where I saw that - with my own eyes.)
Baptism for the dead (and the whole concept of God's grace being extended to all his children who will accept and follow Christ) is one of my favorite things about the Church and is evidence to me not only that the Church has been restored, but that God is a just and loving God.
The revelations that give information on this practice are found in the Doctrine and Covenants, primarily Section 128. It is also mentioned in D&C 124:29, 33; D&C 127: 5-10; and D&C 138: 33.
"Powerful Evidence of a Restoration"
Jeff Lindsay on his excellent website, LDS Baptism for the Dead: Answers to Common Questions tells how:
