In Dylan Thomas' "The Ballad of the Long-Legged Bait," what is he talking about?

Dylan Thomas' poems are full of symbols and images and this often adds to their complexity and ambiguity. You should also keep in mind there is rarely only one coherent interpretation of a given poem, and  The Ballad of the Long-Legged Bait is no exception. What I offer here is one interpretation; you should consider other possibilities as well.

The most obvious reading of the poem is that it's about the possibility of salvation via the subsumption of sensual desire. The voyage of the fisherman can be construed as the process of purification. Let's consider some of the imagery in order to see whether or not this interpretation can be supported.

First, we have the fisherman using a girl as bait:

For we saw him throw to the swift flood
A girl alive with his hooks through her lips;

We are also told that "Sin...had a woman's shape". Consider, also, stanza 4:

The sun shipwrecked west on a pearl
And the moon swam out of its hulk.

The sun, here, can be interpreted as a symbol of masculinity and the "pearl" on which it is shipwrecked can be interpreted as a symbol of femininity; the moon, too, is usually a symbol of femininity. The "Funnels and masts" in the following stanza highlight the female/male imagery. The "long-legged bait"  is cast into the "sick sea" which is full turmoil and "every beast" and "every turtle" participates in the "Huge weddings in the waves". The death of the girl, however, frees the fisherman from his preoccupations with sensual pleasure ("Mast-high moon-white women naked / Walking in wishes and lovely for shame") and allow him, eventually, to ascend to a higher pleasure. 

The symbols — as well as direct references like "Lucifer" — also bring to mind the Bible (especially The Book of Revelations). All these reinforce the theme of the mortification of the flesh and the rewards it brings.