"Dan" means "single". 
The concept of "one" was very important in the Taoism. One meant "single", which was in turn equivalent to Dan. This connection demonstrated the process of evolution and branding throughout the Taoist history.
Therefore, the so-called "Dan-bearing" in Taoist jargon was referring to a state when the Qi inside one's body was mellow and plenty enough to dispel the pathogenic energy, prolonging one's life.
Another example would be the term "Yuan Ying", which was referring to the recovery of one's original simplicity; by condensing one's vital essence inside one's body, one could create another self in pure-energy form, as primordial as a baby.
However, as time passed, these concepts were misinterpreted by later generations. Dan-bearing was translated into the production of a tangible ball resembling a glass marble, while Yuan Ying became a bouncing and vivacious little man.
Let's talk about "The Kinship of the Three, in Accordance with the Book of Changes" by Wei Boyang again. He proposed to practice both Neidan and Waidan. By using the human body as a cauldron, one could nourish Qi inside one's body. Combined with consuming Jindan [TL/N: "golden elixir"] as an external source, one could achieve immortality.
This argument contradicted the mainstream theories at the time, therefore when the book came out, it did not attract much attention from his contemporaries.
Similarly, also in Han Dynasty, the Taoism started to shift from a philosophical school towards a religious or more superstitious one. Sects like the Way of the Celestial Masters and other less organized ones were formed, among which were the sect Xiaozhai belonged to--the Ancient Immortal Sect.
The third period came around a thousand years ago and was named the "Transformation" period.
The period several centuries after Han Dynasty saw the most prosperous years of the cultivation community. By Wei-Jin period, Waidan and essence-consuming methods had become the mainstream practices, while Neidan practice turned underground, passing down secretly among the common folks.
Cultivators of this period were divided into three grades. According to the "Immortal Scripture", "The first-rate cultivators can lift themselves into the sky and are called Heavenly Immortals; the second-rate ones travel freely among famous mountains and are called Earthly Immortals; the third-rate ones would be rid of their bodies only after physical death and are called Corpse-shedding Immortals."
The so-called Corpse-shedding Immortal referred to the phenomenon when one left the mortal world leaving their body behind, or when the body disappeared but left behind some object as a replacement. According to the records, "Some man in the capital was released from his physical form. When his coffin was opened several days after his death, only a walking stick was found lying in it."
This depicted one of the corpse-shedding methods, which was carried out through a walking stick. It went without saying that ascension into heaven by corpse-shedding was considered a third-class technique and was gradually abandoned as a result.
After that came the Sui and Tang Dynasties, when a great line-up of cultivators such as Zhong Liquan, Lü Dongbin, Chen Tuan and Zhang Guo started to look into the practice of Neidan, supplementing and perfecting the method.
The inheritance of Waidan and essence-consuming practices suddenly fell out of favor while Neidan practice prevailed in the society again, to such an extent that it seemed almost ready to replace every other kind of Taoist skill. "The Kinship of the Three, in Accordance with the Book of Changes" was worshipped as the foundation of all Dan scriptures and numerous sects began to prosper during this time period.
The fourth stage started over five hundred years ago and was named "Near-ancient" period.
By then, Neidan practice had unified the Taoist community, to which the chief conflict was represented by the competition among various sects and schools. The Quanzhen School was founded in the north, where Qiu Chuji was teaching the Taoist theories in the Yuan Dynasty of Mongolia, who had been granted the power to take charge of the Taoist community in China.
While this was happening in the north, in order to counteract the rise of Quanzhen, the Way of Celestial Masters of Longhu Mountain, Shangqing School of Mao Mountain and Lingbao School of Gezao Mountain combined into a single sect, namely the Zhengyi School [TL/N: the Way of Orthodox Unity], acknowledging Celestial Master Zhang [TL/N: Zhang Daoling] as the sect leader.
As a result, the arrangement of Quanzhen ruling the north and Zhengyi leading the south was formed. However, the Southern Sect founded by Zhang Boduan was also incorporated into Quanzhen later, providing the latter with an unparalleled publicity at the time.
The Neidan practice method during this period had been thoroughly perfected and refined, which had resulted in two sets of theories, namely the "Yang spirit" and the "transforming the essence into Qi and Qi into spirit through cultivation, so that the spirit could return to its virtual state", both of which had been much bragged about throughout history.
However, it marked the last bit of glory of the Taoism. From then on, only Priest Sanfeng [TL/N: Zhang Sanfeng] stood out as a flash in the pan and the religion itself had fallen completely into decay.
The Taoist system could be generalized as follows.
The Ancient period was characterized by the emphasis on longevity of the physical body, which had slightly fallen out of favor in the Ancient Immortals period, but the cultivators still paid a lot of attention to enhancing their physical bodies. The Neidan practice did not exist in these two periods.
When the Transformation period arrived, the concept of Neidan was on the rise.
Quanzhen School had basically denied the possibility of achieving immortality in a physical form. Despite the claim of refining both physical and spiritual forms, cultivators of this time were preferring one form over the other, failing to treat them equally in cultivation.
According to the Neidan practitioners, the ultimate score one could achieve was the release of the Yang Spirit, which was to escape from one's physical body and ascend to heaven in the form of one's spirit alone, obtaining longevity.
Despite the long life one could achieve through this method, it was not an orthodox practice, for without a physical body, one would have abandoned the opportunity of ever approaching the Great Dao. It would be even harder for them to push their cultivation level further and reach the heavenly immortal state.
Moreover, the concept of Yang Spirit was hardly a convincing one. Apart from sporadic deeds of Zhang Boduan, little records exist on the matter.
The Neidan advocates had probably realized this as well, and as a result, any cultivator passed away who had lived long enough was deemed to have ascended to heaven and become an immortal. It was their spirit that had flied up into heaven anyway. Since it was invisible to any onlookers, there was no way to prove or disprove it.
To summarize, the Taoist cultivation system had shifted from the human world to the immortal one, and from consuming essences and Waidan to Neidan practice and releasing Yang Spirit, which was only becoming a shabbier and shoddier path.
Finally having read all the files, Gu Yu involuntarily let out a long breath. Looking up, he saw Xiaozhai lean on her chair, bathed in a soft lamplight. The darkness had set in completely outside the window.
In a split second, he almost forgot where he was.
"Have some water." Xiaozhai had prepared some drinking water for him in advance. Pushing the glass gently towards him, she said, "I'll give you a moment to let it sink in."
Taking up the glass, he sipped some first, then tilted his head back and drained it completely.
He couldn't help it. Right now, various world views were swimming in his head and he could no longer tell true from false. Everything felt unreal. He had talked to old Priest Mo some time ago, when the latter had a lot to say on the subject.
Being a disciple of the Southern Sect, Priest Mo naturally took his own sect's side. According to him, the Southern Sect was unparalleled and Zhang Boduan the grandest Taoist founder of his times. The methods of Yang Spirit and Coordination between Physical and Spiritual Life were the most orthodox approaches there existed in the whole wide world.
However, from the files compiled by Xiaozhai, he could detect an implicit disdain towards Neidan practitioners. Take Yang Spirit as an example. Come to think of it, wasn't it simply a variation of the Corpse-shedding Immortals?
It should be rated even lower than the Corpse-shedding approach, actually. After all, the latter could take their bodies with them and leave behind an object as a replacement. The Yang Spirit practitioners, on the other hand, had to dump their bodies in the physical world.
As scarce as his speculative knowledge already was, he was in an utter state of confusion due to the impact of reading through the files. He did not manage to come up with a question until quite some time later. "This stuff you have come up with, are you sure about its accuracy?"
"Those are 40% textual research and 60% speculation of my own." She answered frankly, then added, "There are a few things that I am quite certain of, though. First, numerous cultivators indeed existed in ancient times. Second, Wei Boyang did not write his 'The Kinship of the Three, in Accordance with the Book of Changes' out of the blue. Something must have changed."
"Exactly!" Gu Yu's face brightened up and he followed Xiaozhai's train of thought. "I found it very strange when I was reading just then. The essence-consuming method was in vogue at the time and there were frequent records on people ascending to heaven. The skill itself did not appear to be problematic and the authorities showed no intention to obstruct it in any way. There was no reason for him to research into Neidan practice, which was far more inferior to essence-consuming."
"It has really puzzled me as well. But ever since I met you, I was able to come up with a few guesses."
Looking at Gu Yu, Xiaozhai asked all of a sudden, "Did you say that you could consume natural essences?"
"In that case, can you tell if the spiritual essence has been there since the ancient times, or did it just appear out of the blue?"
The question took Gu Yu by surprise, but he immediately saw what she was getting at. Startled, he said, "Are you saying…"
"Yes! In the Ancient period, cultivating skills were of a minimalist style and with unmatched power. However, they were extremely picky when it came to the cultivation environment. All revolutions and reformations in later generations were carried out to lower that standard. Therefore, I think Wei Boyang realized that the spiritual essence was waning as time passed. If they continued to follow the legacy of ancient skills, when the spiritual essence in this world was used up, it would be the end of the entire cultivation community."
Xiaozhai paused, then continued her explanation. "Later practices such as Waidan and Corpse-shedding were all in one way or another exploring methods to get rid of one's physical body. In the end, Neidan practice managed to unify them all. Maybe it was indeed able to open a new path, but you have to realize that only the theories were recorded in the Taoist world, for the cultivating methods themselves were passed on orally from one generation to another.
Taoist sects were engaging in fierce conflicts at the time, both externally and internally. Quanzhen School alone had dozens of branches and every sect was scrambling for fame and fortune. A lot of sect leaders themselves were inadequate in cultivation, but still instructing disciples. One could imagine what outcome this would bring about.
In the several centuries after Priest Sanfeng, not a single figure worth remembering arose from the Taoist community. In my opinion, this was partly due to the loss of Taoist skills and partly because of the drying up of the spiritual essence. Modern times have seen enough chaos caused by various wars and the Taoist community has gone into seclusion to find some peace and quiet. It was not until ninety years ago when the modern state began to take shape and the Taoist association was established that various sects reemerged."
Gu Yu could not help but interject at this point. "I am practicing the essence-consuming method now. So, it might indicate that the spiritual essence in this world is recovering?"
Blinking, Xiaozhai did not answer him straight away, but chuckled instead. "Do you know what we are doing here now?"
 TL/N: The Chinese characters 丹 and 单 have the same pronunciation, hence the equivalence between the two. On their own, 丹 means "pill" and 单 "single" in the context here, but as any other Chinese characters, they do have other meanings. ED/N: Long story short, 丹 normally refers to pills but the author emphasizes it's another meaning she is talking about.
 TL/N: Literally "primary infant".