The concepts of yin and yang are best explained once a working knowledge of chi has been developed. Chi is the basic, universal energy that everything consists of and feeds off of in order for life to exist. All matter and energy is considered to be chi. Chi can be felt by holding the hands a few inches apart. The warmth and tingling magnetic feeling that the hands feel when brought close to each other is the protective chi (wei chi) that surrounds the body and protects it from detrimental environmental factors which are thought to cause illness.
Although chi is universal and whole, the mind, entrenched in duality finds ways to divide the whole into parts. It begins with a single division, then through the natural course of creation, ends with all the things in creation (lao tzu refers to these as the 10,000 things which are many, but not infinite) (finite but unbounded in the language of quantum physics). Picture a mountain: the sun is shining on one side of the mountain, and the other side is in shadow. The side upon which the sun is shining is warm and bright: this is the Yang side. The Yin side is in shadow, and is cooler and darker.
It is believed that all things have both a yin and a yang aspect, and that both are required for matter to exist, and for change to occur. All change is considered to be a result of the transformation of yin into yang and yang into yin. They depend on each other for definition.
Yang is the active principle, which leads to movement, force, thrust. Yin is the form which moves. The action is dependant on the form in order to have something to move, and the form is dependant on the action in order to keep itself from disintegrating. A body which remains still decomposes.
Yin and Yang control each other. If one aspect is in excess, then the other one is deficient. Too much activity burns up the form, and to much form weighs down the activity.
There are two types of transformation, harmonious transformations, that arise from the natural course of events; and sudden, disruptive changes that are symptomatic of imbalance. Harmony is when yin and yang are in equal proportion to each other.
The manner in which yin and yang transform into each other is the formula for all organic processes. It is far too complex a system for inclusion here, but is understood through many years of study and application of the I ching (book of changes) which serves as a map of systems theory, an oracle, and a means for guiding the consciousness to the present moment (which is the only chance for recognition and grasping of the Tao).