Knowing ignorance is strength.
Ignoring knowledge is sickness.
If one is sick of sickness then one is not sick.
The sage is not sick because he is sick if sickness.
Therefore he is not sick.
Lau reads this completely differently:
To know and yet think one does not know is best;
Not to know and yet think that one knows will lead to difficulty.
It is by being alive to difficulty that one can avoid it. The sage meets with no difficulty. It is because he is alive to it that he meets with no difficulty.
And the Ma wang tui text is different again... sort of somewhere between the two:
To know you don't know is best.
Not to know you don't know is a flaw.
Therefore, the Sage's not being flawed
Stems from his recognising a flaw as a flaw.
Therefore he is flawless.
Oddly, the first two lines of the text have been the source of much confusion amongst scholars... Possibly because, for them, knowing (and only knowing) is knowing?... I don't know.
Wang Pi's comment is almost as laconic as the text itself. He says:
If one does not realise that knowledge is not worth relying on it will result in harm.
To regard harm as harm means that one has recognised how it is harm.
Professor Cheng says: 'To know yet appear as not knowing is best' harks back to chapter 56, 'one who knows does not speak', thereby appearing not to know. This is good. 'To know yet appear as knowing is sickness' describes someone who does not know and yet speaks. His 'knowledge' is his sickness, the disease of convincing oneself that one 'knows' what one does not. This is finally the real meaning of Lao–tze's words albeit they are very simple. 'Whoever is sick of sickness will not be sick' means that those who recognise this sickness for what it is will scrupulously avoid it. The Sage can do this.
Thought — knowledge — goes only just so far. Like language, it is inherently dualistic. Also almost inevitably based in the subject — ego–centric, as it were. Furthermore, what can be known is infinite in its possibilities. Nobody has the time or even the capacity to know everything.
Basically what we call 'knowing' is just made up of glimpses, passing acquaintance, assumptions, opinion and presupposition. We don't really know anything about anything, starting with ourselves and moving west in any direction...
We just think we know, which is quite a different thing.