That is, that someone, seemingly unbaptised, who dies, dies in the state he is in. It's just that "the state he is in" is the state of a baptised person, because God knows that the person will later be baptised by his descendents.
It might be helpful if we begin by re-imagining the location of the deceased as being similarly bound in some parallel time-and-space continuum, subject to age/growth/development/etc., rather than being a static "timeless" state where all judgements have already been rendered and things made (entirely)new all at once.
I suspect that baptism-for-the-dead here is more symbolic than regenerative, but being baptised in this system somehow counts for "brownie points" re obedience, justification, etc in the afterlife. The unbaptised dead guy is more-or-less stuck in a dead-end job (bad pun, I know) in this afterlife, but having his spiritual resume suddenly updated with a baptism credit (via the works of his still-alive progeny), enables him to quit his job at the spiritual equivalent of McDonalds and get a better-paying job in the afterlife.
In a manner of speaking, of course.
Interesting.
SD