4. The Dao and the Myriad Things

Lao Zi holds the view that the Dao is the omni-principle of all individual principles. Thus the Dao produces all things; and likewise all things develop from the Dao. The interactions and interrelations between the Dao and the myriad things are in fact the extension of his theory about the ultimate origin and coming into being of the universe, the process of which is historically significant due to its connection with the way of thought and world view of the ancient Chinese. And the function of the Dao in general can still find its traces and influences deep in the psycho-cultural structure of the Chinese people today. To be chiefly discussed in this section are chapters 42, 32, 34, and 39 (DDJ ).
4.1 (Chapter 42)
The Dao produces the One.[1]
The One turns into the Two.[2]
The Two give rise to the Three.[3]
The Three bring forth the myriad of things.
The myriad things contain Yin and Yang as vital forces, Which achieve harmony through their interactions.[4]

Annotations:
[1] The One" here stands for the Whole as the Ultimate Origin of Heaven and Earth. It is allegorically perceived as the chaos of the universe where everything stayed in an original state of entirety or without discrimination in between. It can be said to be another name for the Dao as the beginning of all things. It is thus used repeatedly by Lao Zi in chapters 10, 22 and 39, etc. In Chinese language "the One" also features absolute uniqueness and unity as well, which are in turn aspects of the Dao.
[2] "The Two" refer to two vital forces known as Yin and Yang. A further rendering of Yin and Yang may be as two essential kinds of qi (variously described as matter, energy, vital breath, power, etc.) that oppose and complement each other. The ancient Chinese people in general and thinkers in particular believed that all things were produced as a result of their interactions or complementary interrelations. The concepts of Yin and Yang carry a much wider sense in different contexts.
[3] "The Three" are usually supposed to be a well-balanced type of qi which results from the interactions between Yin and Yang. "The three" are interpreted as three types of qi owing to the interactions of Yin and Yang: In the first type the Yin qi overwhelms the Yang qi (yin sheng zhi qi), whereas in the second type the opposite happens and the Yang qi overwhelms the Yin qi (yang sheng zhi qi); and the third type then is what is above-described as well-balanced-both the Yin qi and Yang qi form into a harmonious realm.
This description seems to me to correspond to the general-characteristics of all things in reality that may well be illustrated via a continuum; that is, some go to extremes while others are slotted into places between the two ends of the continuum.
[4] The Chinese word thong is used here as a verb, meaning the interacting and dynamic relationship between the Yin qi and Yang qi, which then lead to the harmony of the substances. But Fung Yu-lan assumes that thong qi is another kind of qi encompassing the Yin qi and Yang qi within itself. It is similar to "the One" or the Dao in this context.

Commentary:
This chapter discusses the originality of the Dao and the coming into being of the world. The concepts of "the One," "the Two" and "the Three" are symbolically employed to explicate the process of how the Dao produces the myriad things. This process is characterized with a transition or evolution from the simple to the complex, which happens to reflect the development of all creation. In short, this discourse of Lao Zi is typical of his doctrine concerning the origin and coming into being of the universe which all trace back to Dao.
4.2 (Chapter 32)
The Dao is eternal and has no name.[1]
Though it is simple and seems minute,[2] Nothing under Heaven can subordinate it.
If kings and lords were able to maintain it, All people would submit to them

(1)(2)(3)(4)