Zhuangzi suggests that humanity requires a Great Awakening. What would this entail? "Only after one is greatly awakened does one realize that it was [is] all a great dream, while the fool thinks he is awake and presumptuously aware." (2:12; Mair) We might have thought that we awaken to "the answer", "Ultimate Reality", or the "Truth", but this is the last thing Zhuangzi would suggest. We do not awaken to knowing, but to not-knowing. We awaken to the reality that we are all always in a dream. If this is not the "enlightenment" we had hoped for, Zhuangzi would suggest that it is the only awakening on offer. This is the foundation of his unique vision of liberation and freedom through release into the unfixed flow of things.
A butterfly dreams he is Zhuangzi. Zhuangzi dreams he is a butterfly. When both or either awakens, neither knows for sure which he is. Yet why should it make any difference? While a butterfly he enjoys being a butterfly. While Zhuangzi, he enjoys being Zhuangzi. In either case his enjoyment is predicated on his awakening to the reality that he may be either or neither. Though it is true that these are "two distinct identities", awareness of this fact releases one from the deception of one's being any one fixed identity. Attachment to any one fixed identity can only guarantee loss. The threat of loss can only lead to anxiety and fear.
How do I know that in fearing death, Zhuangzi asks, I am not like a child who has forgotten his way home? Clinging to life in fear of death is like clinging to being a man when I may be a butterfly. Unfixed as living allows that death and life be understood as a "single string". Today a man, tomorrow a "bug's arm" — all things are possible, all things are acceptable.
This release into not-knowing and unfixity is the Zhuangzian vision of freedom. Epistemology and ontology might be the philosophical and intellectual categories which correspond to these experiences, but it is the fact that they are experiences that really matters. How far removed this is from how we would prefer it to be! All Zhuangzi's intellection, all his logical argumentation, is intended to demonstrate that things are not, in fact, as we might wish them to be. This in itself is not unique; Hui Shih and other sophists did the same. Only unlike them, Zhuangzi understood how this awareness need not be the end, issuing in negation and despair, but a beginning, opening the heart to freedom.
Other philosophies speak of the dreaming, and some of these have that it should negate and denigrate our apparent reality. If there were another possibility (Truth), then perhaps that might be justified, but Zhuangzi sees no other possibility and thus no problem with dreaming. Enjoy the dreaming, he says, and enjoy each and every dream. Be she who can do so, he declares, and there is no end to your enjoyment.
You can check out Scott's writings on Zhuangzi here.