Several Daoist texts discuss the ancient practice of the Circulation of the Light and/or its confirmation signs. However, not many readers including translators of these ancient Chinese texts and scholars of Ancient Chinese Philosophy happened or would tend to see it that way. In line with the Tao Te Ching these readers are not alone; because since ancient times - upon hearing of Tao - only the first class scholars have had actually put it into practice.
Now as to whether or not Zhuangzi - a follower of Laozi according to the Grand Historian, Sima Qian - was a first class scholar of Tao, he for certain knew something about the Circulation of the Light.
Since in the chapter on Xin Zhai or ‘Fasting of the Mind’, he had had described the early stages of its practice including that of seeing the light:
“Look at that aperture (left in the wall);--the empty apartment is filled with light through it.”
In addition to Xin Zhai, there is an excerpt from the texts of Zhuangzi on a purported discussion between Huangdi (the legendary Yellow Emperor) and his teacher, Guang Chenzi - one of the earliest Daoist celestial immortals – which also relates to the Circulation of the Light.
I have broken up the excerpt into smaller paragraphs with key phrases highlighted (in italics or bold) - for readers - to make it easier to understand and simpler to follow:-
“Guang Chenzi hastily rose, and said, 'A good question! Come and I will tell you the perfect Tao. Its essence is (surrounded with) the deepest obscurity; its highest reach is in darkness and silence. There is nothing to be seen; nothing to be heard. When it holds the spirit in its arms in stillness, then the bodily form of itself will become correct.
You must be still; you must be pure; not subjecting your body to toil, not agitating your vital force;--then you may live for long.
When your eyes see nothing, your ears hear nothing, and your mind knows nothing, your spirit will keep your body, and the body will live long.
Watch over what is within you, shut up the avenues that connect you with what is external;--much knowledge is pernicious. I (will) proceed with you to the summit of the Grand Brilliance, where we come to the source of the bright and expanding (element); I will enter with you the gate of the Deepest Obscurity, where we come to the source of the dark and repressing (element).
There heaven and earth have their controllers; there the Yin and Yang have their Repositories. Watch over and keep your body, and all things will of themselves give it vigour. I maintain the (original) unity (of these elements), and dwell in the harmony of them. In this way I have cultivated myself for one thousand and two hundred years, and my bodily form has undergone no decay.'
Huangdi twice bowed low with his head to the ground, and said, 'In Guang Chenzi we have an example of what is called Heaven'. The other said, 'Come, and I will tell you:--(The perfect Tao) is something inexhaustible, and yet men all think it has an end; it is something unfathomable, and yet men all think its extreme limit can be reached. He who attains to my Tao, if he be in a high position, will be one of the August ones, and in a low position, will be a king.
He who fails in attaining it, in his highest attainment will see the light, but will descend and be of the Earth. At present all things are produced from the Earth and return to the Earth.
Therefore I will leave you, and enter the gate of the Unending, to enjoy myself in the fields of the Illimitable. I will blend my light with that of the sun and moon, and will endure while heaven and earth endure.
If men agree with my views, I will be unconscious of it; if they keep far apart from them, I will be unconscious of it; they may all die, and I will abide alone!'”
[Book XI - Zai Yu or ‘Let it Be’- Legge]
If those practising neidan (inner alchemy) can only see the light; they would progress no further in the attainment of Tao.
They would need to witness the interchanging of the Dark and the Light; Yin Yang; Forms and Emptiness before they can enter the Mysterious Gate(s).
However, aspiring first class scholars – the right persons for Tao – who have had correctly practised the Circulation of the Light over the years would be able to see the manifestations of what Guang Chenzi had had described – most of which have already been embedded in the Tao Te Ching for more than 2,500 years.
This includes seeing splendid Heaven, another eternal signpost of the Way.