Covenant theology is the framework through which Scripture organizes God's redemptive dealings with humanity, primarily centered on the Covenant of Works made with Adam and the Covenant of Grace established in Christ. While Reformed traditions broadly agree on these categories, Presbyterian and Baptist traditions differ on the relationship between these covenants and the administration of the church.
Covenant theology understands the Bible as a narrative of God's redemptive promises. The WCF Ch.7 §2 outlines the Covenant of Works, where Adam stood as the representative of all mankind under a requirement of perfect obedience. After the fall, humanity became incapable of attaining life through works, necessitated by the reality that we are more flawed than we dared believe. Consequently, the 1689 LBCF Ch.7 §3 emphasizes that salvation is found only through the Covenant of Grace, which is rooted in an eternal transaction between the Father and the Son to redeem the elect.
The Covenant of Grace serves to deliver the elect from the misery of sin through the work of a Redeemer. As noted in the WSC Q.20, this covenant is the vehicle by which God brings His people into an estate of salvation. This arrangement is often described as a testament, finalized by the death of Christ. The author of Hebrews writes: Hebrews 9:15. In this, we find that we are more loved in Christ than we ever dared hope, for He is the testator who secures our eternal inheritance.