Expanding and contracting consciousness is equivalent to muscular exercises in bodily terms, though when we use symbols we are contracting consciousness in one world by expanding it into another, the symbol being a common link between both. Our exercises therefore, must consist of reducing the time-event extent of a mass consciousness into a single symbol...We can reverse the procedure and extract masses of consciousness from the symbol.
It's an excellent explanation of sigils (though Gray never used the chaos magic version of sigils), but its also a good explanation of how consciousness can be contracted and expanded through magical work. The contraction of consciousness is the ability to distill a complex idea into a symbol, and the expansion of consciousness is to apply that concept to the world. It's one of those processes that is fascinating because of how we can learn a lot about the world through the application of it to our lives.
I've used the contraction of consciousness for public speaking, where I'll contract specific ideas into symbols and then when I'm speaking I'll access those symbols and extract (expand) the information. I've used the expansion of consciousness in my writing, with the idea being to pack concepts into writing and then let them expand through the act of reading them. That's actually how I approach teaching magic. Plant the seed, and then let it expand through the act of reading and application of the concepts.
When we recognize that consciousness can expand and contract, we realize just how flexible it is. Consciousness isn't static, but we can purposely play a role in its changing states and apply those to magical work as well as mundane situations. Actually if you think about it, invocation is a contraction of consciousness or multiple consciousness into one vessel, while evocation is the expansion of consciousness into the world, which has its own consciousness.
There's an interesting exercise where you visualize yourself becoming as tall as possible, and then keeping that visualization of tallness in place, you visualize another you becoming as small as possible. One fits into the other and you contemplate them together. When you can hold that concept pretty well together in your mind you understand contraction and expansion of consciousness.