This term refers to moral conduct that is discreet and unobtrusive. The Daoists believe this is the highest manifestation of morality in a ruler. Dao is the source of all beings and things, and is manifested through wuwei (无为) or non-action. By being discreet and unobtrusive in his moral conduct, the ruler thus emulates Dao. Xuande (玄德) requires the ruler to exercise restraint in his use of authority to avoid interfering with the natural state of his people, which he should comply with and maintain.
Dao is the origin of all things; virtue nurtures all things, which thus assume their different forms, and grow in different environments. That is why all things and beings revere Dao and cherish virtue. This reverence and cherishing arise because there are no demands imposed on the natural state of things and beings. Instead this state is respected. Thus Dao creates all things, virtue nurtures them, and the environment makes them grow and mature. Create without possessing, influence without showing off one’s ability, and cultivate without controlling. Such is the quality of inconspicuous virtue. (Laozi)