"When rights and wrongs waxed bright, Dao began to wane. What set Dao to waning was exactly what brought the cherishing of one thing over another to its fullness. But is there really waning versus fullness?" "For wherever a division is made, something is left undivided. Wherever debate shows one of two alternatives to be right, something remains undistinguished and unshown. What is it? The Sage hides it in his heart."The problem with choosing the 'rightness' of one thing over another is that everything has its 'rightness'; thus, to choose one 'rightness' in opposition to another is to deny that other. This is what the sage hides in his heart — the Unity of all things and thus the 'rightness' of each.
(Zhuangzi, 2:26, 2:33; Ziporyn)
This is why the Hsin-Hsin Ming declares, "The Way is easy; only cease to choose." Preferences divide what cannot in fact be divided. To realize Dao is to dwell in an all-inclusive openness.
The sage is free of preferences, and this enables her to exercise them freely. For life without choices would be unlivable; what matters is our relationship to them. The virtuoso violinist, in choosing and playing his instrument, necessarily excludes making the music of the brass, but unless he wishes to only fiddle alone in the woods, he must also recognize the rightness of all the other instruments. In this way, an orchestra is born. But an orchestra is also a choice of music, necessarily excluding others; yet, though the choice is made and the preference established, the heart need not dwell in exclusivity; it can open itself to every musical expression. This is what the sage hides in her heart.
Dao "wanes", is eclipsed, by our attachment to the affirmation of one thing to the exclusion of others, because Dao is all things. But can Dao then really be eclipsed? Only in the heart of he who eclipses it; the waning of Dao is psychological. Yet even this is Dao.
You can check out Scott's writings on Zhuangzi here.