The holy Ash is the substance the devotees wear on their bodies with adoration and respect. This along with the rudrAxa beads (1) shows up the devotees of the Simple but Supreme Lord shiva. The holy Ash has lots of spiritual sense. There are lots of hymns telling the glory of the holy Ash. ((2) - for example). Ash - the substance that is arrived when things are completely burnt off. In natural terms it is a final state. The state where it has nothing left to burn off ! This indicates the transience of the beings and the Permanence of the Supreme that smears in this ash. This also indicates the matured state of bliss the devotees would be heading towards which stands beyond perturbance - transformation (nothing to burn off).
The purANic events associated with the holy Ash show its significance. When the three daemons of impurities (tripura) were burnt down by the mere smile of the God, the ash that remained got settled on the Lord, Who danced there. Thus the tripurAri was smeared in the Ash that came out of burning out of the three impurities. When the cupid - the deva of lust, tried to fire his arrows on the yogic Lord, he was burnt by the Lord into a heap of ash. The unruffled Lord appeared decorated with that ash. At the times when everything reduces unto It, the Everexistant Lord wears that ash.
The devotees of the Lord, Who gives His form to the ardent worshipper, wear the same way the holy Ash on their body. This holy Ash is prepared in the ritual fire in a specified way (3) along with the chanting of the Holy Five Letters (4) and other vedic hymns. Thus obtained Holy Ash is worn on various specified places of the body including the forehead chanting the Holy Five Letters. (There are two broad categories of wearing the Holy Ash. One is uddUlanam that is sprinkling the Holy Ash on the body and the other is tripuNDram that is in three distinct bands)
Some of the upanishads that hail the glory of holy ash.