The second chapter makes a structural claim that most of the rest of the book depends on. When everyone in the world knows beauty as beauty, ugliness is already there. Recognising a thing as good creates the not-good in the same act.
The list that follows is deliberately mixed. Being and nothing produce each other; hard and easy complete each other; long and short give each other their measure; high and low fill each other out; sound and voice harmonise; before and after follow one another. Some of those pairs are logical, some perceptual, some musical, some temporal, and the range is the point: the claim is not about aesthetics but about how distinctions work in general.
What it is not is a claim that distinctions are unreal or that judgement should be abandoned. The chapter goes straight on to describe how a sage behaves, which would be pointless advice if no course of action were better than another. The argument is narrower and harder: a distinction is a relation, not a property, so anyone who sets up one half of a pair as a standard has produced the other half at the same moment, and a policy built on promoting the good will generate the thing it is trying to remove. Chapter three applies exactly that to government.
This is also where the book's method becomes visible. It rarely argues from premises. It states a pattern, lists instances until the pattern is undeniable, and then draws a practical consequence.