This is essentially a parable nested in another story to make a very specific point. The story this appears in shows Huizi complaining to Zhuangzi about some ex

This is essentially a parable nested in another story to make a very specific point. The story this appears in shows Huizi complaining to Zhuangzi about some extremely massive gourds that he couldn't use as one might use as e.g. a ladle, so he get frustrated and smashes them. Zhuangzi comments that obviously they would be better as floating vessels, and Huizi could have floated down the river in them. All that to make a more general point: if you have the wrong expectations for the way something is, you're going to suffer because of those expectations. The silk-washing family was frustrated because they believed the balm could only be used in one way which kept them very poor and worn out. Huizi suffered because he was gifted seeds for some very large gourds, but expected to use them like normal-sized gourds, and eventually destroyed the gift after expending much time and effort on them.