The author of the 17th Chapter of the Zhuangzi expanded Zhuangzi's perspectival relativism so as to make it the central theme in his treatise and the primary point of entry into the Daoist vision. (Perspectival relativism is the belief that all our judgments of things are based on our individual perspectives and not upon universal and fixed verities.) The River God, who thinks she's great, meets the Ocean God who, though incredibly greater, admits himself to be but a pimple on the backside of all that is. The well-frog thinks himself a great lord of his realm only because he has no clue of the world outside the narrow confines of his well. We are like the well-frog in being in a very narrow place, but can become like the Ocean God who realizes that his apparent vastness is no different than the confines of a well. But if this is the case, the liberation of the well-frog does not differ in kind from the liberation of the Ocean God — for they are essentially the same in being limited. Nor does his liberation require removing himself from his well — for whatever 'vastness' one finds oneself in, it too is essentially the same in being limited. Philosophical Daoism's 'enlightenment' is thus not the realization of an objectively real "Vastness", but of a psychological vastness realized through one's limitedness.
Lusthaus ("Aporetics Ethics in the Zhuangzi") observes how our limits as portrayed in the 17th Chapter are not fixed boundaries, but rather utterly unfixed and unfixable. "Limits are not absolute but rather are characterized by an inability to determine and fix something unequivocally. This unfixability is precisely what functions as a limit . . . Thus what limits us is ironically the very absence of limits!" We find ourselves not so much locked in a prison cell as lost in a vastness of unlimited horizons. We are, as Zhuangzi points out, unfixed in an unfixable world. When he suggests that we unfix ourselves from our sense of being a fixed identity he is simply advocating harmonizing with the reality in which we find ourselves.
This expansion of Zhuangzi's deconstruction of our propensity to fix ourselves through the fabrication of presumed fixed norms and knowledge can be helpful in better understanding what he had in mind. There does seem to be something missing, however, and this I will call a 'mystical trigger', for lack of a better word. Zhuangzi's reason for reasoning through to the limits of reason was to show us another way. The intellectual argument is but a step on the way; it cannot in itself achieve what he envisioned as a liberating perspective, "the view from Dao". Something has to 'happen'; something must be 'done'. A new perspective has to be born in us. I see it as a mystical "leap" of surrender in trust. (I expect to discuss mysticism shortly.)
Thus the 17th Chapter can help us to understand Zhuangzi, but needs to be kept in the shadow of Zhuangzi — if it is Zhuangzi we wish to understand.
You can check out Scott's writings on Zhuangzi here.