As all things are Buddha-dharma, there are delusion, realization, practice, birth and death, buddhas and sentient beings. As myriad things are without an abiding self, there is no delusion, no realization, no buddha, no sentient being, no birth and death. The Buddha Way, in essence, is leaping clear of abundance and lack; thus there are birth and death, delusion and realization, sentient beings and buddhas. Yet in attachment blossoms fall, and in aversion weeds spread.
The first paragraph of Dogen's work plays off of the Two Truths: the relative or conventional realm, where we speak according to social conventions and relative binary concepts (A vs. not-A), and ultimate truth, or truth as experienced beyond conventions or concepts. This warrants a post (or a series of posts) on its own, but it is sufficient for now to say that the Two Truths are not mutually exclusive: relative truth is not a small-t truth nor is ultimate truth a big-T Truth. Similarly, relative truth is not 'half false' nor is it to be looked down upon as something less than ultimate truth. In fact, relative truth exists because ultimate truth exists and vice versa: since we are essentially engaged in this world, we can realize or awaken to ultimate truth; if we weren't so engaged, the conditions for awakening to ultimate truth would be gone. We do not forsake relative truth when we become an Awakened One (Buddha), but we see its truth nature.
It is because of this inter-relation that Dogen says that, "[a]s all things are Buddha-dharma [the Path to Awakening], there are delusion, realization, practice, birth and death, buddhas and sentient beings." However, at the ultimate level, since things like delusion, realization, practice, birth and death, buddhas and sentient beings "are without an abiding self," or are composed of non-delusion, non-realization, non-practice, non-birth and non-death, non-buddhas and non-sentient being stuff, "there is no delusion, no realization, no buddha, no sentient being, no birth and death." This is the potentially perilous conceptual distinction within the notion of emptiness (shunyata): it is not the nihilistic understanding that nothing exists, but rather that things are empty of individual existence.
Consider, for a moment, the nature of delusion: it is composed most immediately of mental formations (with its respective objects, thoughts), but also of form (with its respective sense organs and their objects), feelings (positive, negative, and neutral), perceptions (of good, bad, and irrelevant), and consciousness (both as store [alaya] consciousness and our inherited social order). This then extends even further, beyond the Aggregates, to wrong view, wrong thinking, wrong speech, wrong action, wrong livelihood, wrong diligence, wrong mindfulness, and wrong concentration (the Ignoble Eightfold Path), all with their respective relations to people, contexts, and events. And we can continue to find all the non-delusion elements that constitute delusion, eventually including the whole cosmos, yet we never find a concrete object we can call "delusion". So, put in abstract logical form, A is not-A, which is why it is genuinely A; without the not-A, A cannot exist, which is why the not-A is essentially (rather than contingently) necessary for the (empty) existence of A. Just like a flower cannot exist without the Sun and rain (and the local and cosmic causes and conditions for the existence of the Sun and rain), so delusion cannot exist without, well, everything!
In turning to the next sentence, the Buddha-dharma/Buddha Way, "in essence", is to move beyond notions of abundance and lack, which initially (at the relative level that we primarily inhabit at first) is living in the world of "birth and death, delusion and realization, sentient beings and buddhas." As we start on the Path we have to "leap clear" of our concepts, hence the Path essentially includes working within the relative world of binary concepts like birth and death, delusion and realization, and sentient beings and buddhas. We must not think that we can get to the other shore (paragate, in the words of the Heart Sutra) without first jumping in the boat and moving on the water, without first examining our concepts and (mis)understandings and learning to look deeply so that we can see the emptiness of all phenomena. Thus, an important and essential part of the Path is working with our concepts.
Our constant guard, however, is to remember that even as we try to grasp on to that which is 'good' and 'beautiful', it will eventually wilt and die; even as we try to push out that which is 'painful' and 'disgusting', it will continue to grow and spread. How much of our lives are spent in grasping and pushing? How much energy do we waste in wishing things were different: that the good would stay and the bad would stay out? Creating our concepts of 'good' and 'bad' doesn't help. In fact, it exacerbates things by creating the illusion that that which we think of as 'good' or 'bad' substantially exists, that it is something to be horded or warred against with every breath in our body...so that we cannot appreciate the joy of simply breathing for its own sake. We always have something to 'gain' and something to 'lose', hence we are always doing something for the sake of something else. And then, when we finally get 'what we've always wished for' and 'what would make us happy', it inevitably leaves or something else that will really make us happy takes its place; when we finally 'get our revenge' or 'vanquish our enemy', a new sworn enemy inevitably appears. Seeing the reality of impermanence is the first step in "leaping clear" of our concepts.