Jacob, as he prepared to return to the Land of Canaan after spending a couple of decades with his in-laws in Mesopotamia, was quite terrified. He had fled to Lavan in the first place because of his brother Esav's open musings about fratricide. Now, as he was about to return, he did not know what greeting his brother would give him. Would it be a hug, or a knife?
And so he prepared three different methods of ensuring his survival: Gifts, battle and prayer. He sent lavish gifts to Esav with an entreaty for brotherly forgiveness. He divided the camp up so that if battle should break out, they would be able to survive, if not prevail. And, finally, he prayed to God, "Save me from my brother Esav, for I fear he may try to smite mother and children."
And then, after Jacob had transported his family across a place called Maavar Yabbok, he returned alone to the other side. According to our sages, he had forgotten some small containers. It was there, when he was alone, that the mysterious "man", identified as Esav's guardian angel, fought with him until dawn. As the night ended, the "man" famously wounded Jacob's thigh, causing him to limp. Thus the Torah explains the future prohibition on eating an animal's sciatic nerve.
As the dawn breaks, the "man" wishes for Jacob to release him. Jacob refuses until the "man" blesses him. Obligingly, the "man" informs Jacob that his name shall henceforth be "Yisrael, for you have struggled (sarita) with God and man and prevailed."
Now, if I were a sports commentator, I would assume that the "man" had won, since he had seriously wounded Jacob. Yet we see that it was the "man" who begged to be released! Further, the "blessing" Jacob got seems to be nothing more than a name change. It's not a blessing that he should win the lottery or something. How is a name change a blessing?
The commentary Oznaim LaTorah points out that of Jacob's three plans of action, gifts, battle and prayer, it was only prayer that became practical. Jacob may have thought to rely on his wealth to appease Esav, but that wealth, in the form of the small containers he went back for, caused him to endanger his life. As King Solomon says, "There is wealth guarded for a man to his detriment."
As for war, well, as a new cripple, this is no longer relevant. He's not the superhero who lifts huge stones by himself anymore. He can barely walk straight.
Which leaves prayer. This is the true power of Jacob. Earlier in his life, as he misled his father to get the blessings of the firstborn, Isaac had said "Your hands are the hands of Esav, but your voice is the voice of Jacob." Indeed, this was exactly Jacob's earlier way of interacting with the world, trying to be Esav. The name Jacob comes from "heel", and he was called this because he emerged from Rebekkah's womb grasping Esav's heel.
Jacob had always felt threatened, and was often fearful. His way of dealing with the challenges in this world was to do things in an earthly fashion. He used deception and raw strength. He planned to use wealth and power to survive the encounter with Esav. Those are the tools of a Jacob, who is grasping at the heel of an earthy Esav.
So, in fact, it was a great blessing that the "man" gave him. He changed his name, he changed his self-perception. No longer is he grasping at someone's heel and trying to make his way in a tough world. He has been turned upside down, he is now struggling with God and godliness, and only then with man and humanity. He has become a man of God, and his new weapon is the most powerful one of all, his Voice. His prayers.
Thus, even though on a physical sense the "man" had prevailed, the encounter had transformed Jacob. He was no longer going to rely on his strength or wealth, only on his voice. The voice of Jacob, the power of his prayer, is far superior to the strength of the "man", and thus it was the "man" who was vanquished.
And, anticlimactically, so was Esav transformed. According to the sages, he indeed had been intent upon attacking Jacob. But, for some inexplicable reason, he became merciful at that moment. The Torah has dots on top of the word "And he kissed him" to indicate that this was a special event that happened in that moment. How did it happen?
Simple. Esav had planned to kill Jacob. The man standing before him now was Yisrael. He had planned to attack his manipulative brother. Instead, he met a man of God.
Thus, I firmly believe that when the State of Israel behaves according to her name, Yisrael, people will see a nation of God.