During my second time reading, I felt like the very notion of being a "sage" is in play because it seems like the book is saying that a sage isn't a person of virtue or a very knowledgeable person. Instead, it leans more towards being conscious of one's own flaws. This interpretation can also be supported with the line: "This is why sages embrace the One and serve as models for the whole world", with the "One" being the dao I believe.