It basically means that as an initiate (usually Buddhist initiate or monk of some order) that you know how to stay alive and not just meditate or space out all the time. Because if you don't (in the past before plumbing) carry water, you could not bathe, you could not have water to drink, and if you did not chop wood, you could not cook your food especially in the winter to stay alive and warm.
So, "Carry Water Chop Wood" means in addition to meditations and dreaming you also know the importance of keeping your body alive too so you can do some good here in the world.
I also have lived like this for awhile in life where I had to carry water and chop wood to stay alive. I found it very humbling and useful to live way out away from civilization without electricity carrying water and chopping wood for the wood stove and wood cook stove. Living a very simple life has a lot to be said for it. It heals one's soul (it healed me from growing up in Los Angeles with never ending people and traffic and 14 million to 25 million people (if you consider everyone from Santa Barbara through San Diego as one group it's about 25 million people or more now.
For 5 years I lived 10 miles from the nearest Gas station in a Forest at 4000 feet elevation sometimes in 7 feet of snow in our A-Frame on 2 1/2 acres of land we bought in 1980. This was before solar arrays were affordable like now so we used Aladdin Kerosene lamps which are very bright for reading at night or candles with reflectors in one direction for reading. However, candles you have to be very careful of especially around children who might not be as self disciplined as you might be as an adult.
My older daughter was talking recently about lighting candles on a Christmas tree which is still traditional in Germany, Austria and parts of Switzerland still.
Now where I used to live everyone there that lives there year around has solar arrays and gasoline and diesel generators and wells dug with solar powered trickle pumps up to pressure tanks or gravity feed tanks. But then, it was a different story living remotely off the grid.
Now, you can get cell phone reception but then no one had phones there either. So, it was carry water and chop wood which I loved at the time even in 7 feet of snow at a time. The A-Frame could shed that much snow without shoveling anything off the roof which was great too then. So, if you live where you get 7 to 10 feet of snow or more or it can get like that consider building an A-Frame so your roof doesn't collapse from the snow weight like roofs do many places on earth when they don't shovel the snow off quick enough.
In the winter of 1992 12 feet of snow fell in the little City of Mt. Shasta and roofs collapsed all over the place then and people's lives were disrupted. Luckily, I had moved to the SF Bay Area the previous summer and was only visiting when this happened. The biggest problem for me then was having to dig my own parking place out because otherwise I had nowhere to park because only the roads were plowed not parking places.
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