I disagree with the notion that this one match--out of nearly three dozen head to head matches and hundreds of other matches in their respective careers--is the most important match for either player. Both Federer and Nadal are well past their primes and the Australian Open is indisputably the least significant of the four Grand Slams (the top non-Australian players routinely skipped this event in the 1970s and 1980s).
I am not convinced that any one match can or should be singled out as the most important but if we are going to pick one Federer-Nadal showdown to elevate above all of the others then the choice has to be Nadal's five set victory over Federer in the 2008 Wimbledon Final. That Nadal triumph ended Federer's Open Era record 65 match winning streak on grass courts, it obliterated once and for all the notion that Nadal was only a clay court specialist and it paved the way for Nadal to supplant Federer as the number one ranked player in the world. That match is also arguably the greatest match in tennis history. There is no way that a match in Australia between two past their prime greats can come even close to matching the historical significance of the Wimbledon match that they contested when they were both at the peak of their powers.
Federer is such a media darling that it is easy to forget how thoroughly Nadal has dominated their head to head rivalry. Nadal leads Federer 23-11, including 9-2 in Grand Slams and 6-2 in Grand Slam Finals. Nadal beat Federer early in the rivalry (taking 11 of 17 matches prior to their 2008 Wimbledon showdown) and he has also dominated as both players moved past their primes (winning six of their eight matches since 2011). If Nadal beats Federer in the 2017 Australian Open Final then Nadal will join Roy Emerson and Rod Laver as the only players to win each Grand Slam at least twice (Federer claimed his sole French Open title by not having to face Nadal).
Federer holds the male record with 17 Grand Slam singles titles, but it is important to keep in mind that tennis professionals were not permitted to play in the Grand Slams until the Open Era began in 1968; otherwise, Rod Laver could very well have won 17 or more Grand Slams. Also, Federer has won 25% of his Grand Slam appearances (17/68), a lower percentage than Nadal's 30.4% (14/46); Federer is tennis' Emmitt Smith, a great player who set records based more on durability than dominance.
It must be mentioned in this context that Bjorn Borg, the Sandy Koufax of tennis, holds the record for percentage of Grand Slams won (11/27, 40.7%) and his simultaneous dominance of the French Open's slow clay plus Wimbledon's fast grass is unparalleled; Borg won both tournaments from 1978-80 and when he stopped playing Grand Slams at just 26 he held the modern record for most titles at both events, six and five respectively. Put Borg, Federer and Nadal in the same era with the same equipment and Borg would likely emerge as the best player based on conditioning, mental toughness and ability to dominate multiple surfaces.
Mary Carillo recently offered great insight about the Federer-Nadal rivalry:
I have said and argued with John McEnroe and Ted Robinson during our French Open telecasts for many years that you cannot anoint Roger Federer the greatest of all time if he isn't the greatest of his own time. And it's not just on red clay. Nadal has the edge on hard courts as well. Like in boxing, it's all about the matchup. When Roger is playing at his luminous best he has no need to worry about the other side of the net. But if he is playing Nadal, even his best is often not enough.Nadal has proven to be more dominant on more surfaces than Federer. Nadal owns a decisive advantage in their head to head rivalry. Nadal beat Federer in Federer's prime on Federer's best surface. I cannot imagine how this Australian Open Final would materially alter my opinion about Nadal and Federer; if Nadal wins, this is just a continuation of a well-established pattern of Nadal's superiority, while if Federer wins that would not change the fact that Nadal still owns a huge head to head advantage that he obtained when both players were at or near their primes.
People conflate [Federer's] beauty with supremacy and blur the line between high art and [Nadal's] impossible-to-ignore domination. I think Roger Federer is the most stylish, elegant and gifted tennis player I've ever seen. Roger is all that is right in this tennis world. Rafa Nadal is his perfect rival--powerful, explosive, gritty and gutsy.
Any Federer fan who hypes up this match as Federer's great opportunity to prove that he is a greater player than Nadal should be prepared to make the opposite declaration if Nadal wins; it makes no sense to act like this match matters if Federer wins but to give Federer a pass if he loses. Such thinking reminds me of a writer who years ago claimed that a Lakers-Rockets game seven would be the biggest game of Kobe Bryant's career (the writer hoped/expected that a loss would somehow define Bryant's legacy)--but after Bryant's Lakers won, this writer did not make any comment about this victory defining Bryant's legacy in a positive way.
Federer and Nadal have both defined their legacies already. This match will be one more chapter--and perhaps a poignant/nostalgic one if it turns out to be their last Grand Slam Final battle--but no one should make bold declarations about all-time rankings based on the outcome.
My prediction? Nadal wins in four sets. Either during the match or shortly thereafter, Federer will indicate that he was not at full strength physically. Nadal will be humble in victory and declare that Federer is still the greatest player; Federer's media fans will agree with Nadal and will state that Nadal's victory over an aging Federer is not really that significant (but if Federer somehow wins this match, brace yourself for a barrage of articles declaring that Federer is the greatest tennis player of all-time).