The martial tradition is most closely associated with the Southern tradition of Daoist practice with its initial use of physical culture to enhance mental / spiritual development. However all Daoist traditions have at their core the same underlying concepts and theories. The cultivation of Vitality, Energy and Spirit - The Three Treasures (San Bao).
A good point to start is the term “Dao” 道. At its most fundamental it refers to the creation of the universe and all things that came into existence following that moment. Because the Dao simultaneously encompasses everything in existence yet in itself is not physically manifest, Laozi 老子, the alleged author of the Daode Jing 道德經, wrote in his opening lines:
The Way that can be described is not the absolute Way;
the name that can be given is not the absolute name.
Nameless it is the source of heaven and earth;
named it is the mother of all things
The diagram to the right represents the Daoist creation concept, from the top;
The empty circle = Wu Ji: Pre Celestial existence. This is before differentiation takes place. The circle with black and white sections = Taiji: Post Celestial existence (note thisis an earlier version of the more common two 'fish' Tai Chi sybol used today). This is the first stage of differentiation. The black represents Yin 陰 and the white represents Yang 昜 all things manifest can be classified into Yin or Yang. Yin is analogous with; earth, dark, female, soft etc. Yang is analogous with; heaven, light, male, hard etc. Yin and Yang within Taiji are not separate but merely different manifestations of one unified energy.
The next level illustrates further differentiation into Five Phases = Wuxing 五行. It should be remembered that just as Yin and Yang are a part of a single whole the same is true of the five phases. This is why the translation into 'Phase' rather than the often used 'Element' is more correct.
The next two circles illustrate the concept that all things can be considered to be either Pre or Post Celestial in nature. The first circle illustrates the perfect male and female principle. The second refers to "The Ten Thousand Things produced". All things that are physically manifest are considered to be Post celestial in nature. Things that are more manifest in an energetic way, the "perfect principles", are considered to be Pre Celestial. Therefore in terms of practice physical activities such as Dao Yin, TJQ form or XYQ form training would be considered to be Post Celestial practice. Meditation should strive to be a Pre Celestial practice.
As mentioned above, the martial tradition is closely connected with the Southern Daoist tradition. Both Northern and Southern traditions use what is referred to as dual cultivation. This indicates that both physical (life) and mental (essence) should be cultivated. The main difference is one of emphasis. The Northern School is heavily influenced by Chan (Zen) Buddhism. As a result the Northern school places greater initial importance on the mental (essence) aspect of training, whereas the Southern school initially works more on the physical side (life) of cultivation. Ultimately all practice should culminate in mental cultivation as this enables the practitioner to return to a Pre Celestial state.