Yearley (in Experimental Essays on Chuang-tzu) identifies intraworldly mysticism as that aspect of Zhuangzi's philosophy that renders it radically different from the more conventional reworkings of that philosophy by subsequent interpreters (principally the author of the 17th Chapter). He begins his discussion of what this means, and how it is in many ways unique, through a comparison with two other types of mysticism, and although I have already (and recently) made similar comparisons, I will briefly share his analysis here.
These two traditional forms of mysticism essentially follow the distinctive lines of Western theism and Eastern monism. The former, Yearley suggests, seeks union with God, who must ultimately remain other. (When Jewish [Spinoza], Christian, and Sufi mystics transgress this line, as they sometimes do, they are said to have committed heresy.) The latter, seeks absolute unity with the Ultimate. In the case of the former, a helping hand is required; the practitioner cannot do it on her own, but requires grace, God's involvement. In the case of the latter, the practitioner is the Ultimate and need only to discover that reality. In both cases, one is directed out of and away from the mundane world.
Zhuangzi's intraworldly mysticism, on the other hand, makes no appeal at all to either union or unity with anything beyond our actual existential experience. It is fully focused on and engaged in the world, albeit in a manner of detached freedom that Yearley describes as having a "mind as spectator". It may be that I have not correctly understood Yearley at this point, but his subsequent explanation of intraworldly mysticism seems to me to have followed a consequence of that mysticism as if it were the essential experience itself.
Yearley understands intraworldly mysticism as the ability to engage with things as they arise and to let them go as they pass since the world is ever-transforming (hua). He uses Zhuangzi's "Axis (or Hinge) of the Dao" (where we are entreated to sit in the center of the circle so as to be able to respond to all events and opinions with equanimity) and his imagery of using "the mind like a mirror" (reflecting but not retaining) to makes this point. This is certainly a suggested practical expression of Zhuangzi's mysticism, but is it the mysticism itself? I think not. Indeed, it seems to me that Yearley has taken up and intellectualized a theme of Zhuangzi's philosophy to the detriment of his overall vision, very much like the author of the 17th Chapter also did. The extremes to which he later drives this interpretation (to be discussed later) are, I think, a consequence of this mistake.
So what then is the true understanding of Zhuangzi's vision? Fortunately, lack of space does not allow me to pursue it now. Perhaps tomorrow I will have forgotten that I have backed myself into this corner.
You can check out Scott's writings on Zhuangzi here.