The significance of the Battle of Olustee includes the following:
- The battle was the largest and bloodiest Civil War battle fought in Florida.
- The Confederacy was successful in protecting the surrounding area of the state capital.
The other two options regarding Union victory and the role of the 54th Massachusetts Infantry do not accurately reflect the historical outcome and context of the battle. The Confederacy won the battle, and it was a setback for Union forces in their attempts to establish a stronger foothold in Florida.