What is the meaning of 'embracing desire but not embracing the Dharma'?

Original text of the Laṅkāvatāra Sūtra: 佛说：所谓贪者。若取、若舍、若触、若味。系著外尘。堕二边见。复生苦阴。生老病死忧悲苦恼。如是诸患皆从爱起。斯由习近世论。及世论者。我及诸佛。说名为贪。是名摄受贪欲不摄受法。大慧。云何摄受法。谓善觉知自心现量。见人无我。及法无我相。妄想不生。善知上上地。离心、意、意识。一切诸佛智慧灌顶具足。摄受十无尽句。于一切法无开发自在。是名为法。所谓不堕一切见、一切虚伪、一切妄想、一切性、一切二边。

Brief Explanation: Toward anything, whether one has a mind of grasping or a mind of aversion, whether one touches it or immerses oneself in it, with the mind attached to these sense objects—all of these are manifestations of craving and attachment, and one will fall into the aggregate of suffering feelings; birth, aging, sickness, death, sorrow, grief, suffering, and distress then become unavoidable.

All the faults of birth and death are entirely caused by craving and attachment. Habitually studying worldly treatises and associating closely with worldly teachings gives rise to craving and attachment toward worldly dharmas. The Buddha said that in this way sentient beings take up craving within their minds, not taking up the Dharma.

What is taking up the Dharma? It is being well aware that all the dharmas one knows and contacts are manifested by one's own mind—manifested through the combined functioning of the three transformative consciousnesses (parināma), born from the true mind, the eighth consciousness, in dependence on conditions, and not truly existent. The eighth consciousness is the first consciousness capable of giving birth to dharmas; the seventh consciousness is the second consciousness capable of prompting dharmas to arise and manifest; the six consciousnesses are the third consciousness capable of manifesting dharmas. When the three combine, all dharmas come into operation.

When contacting all dharmas, one should clearly be aware that the five aggregates and eighteen realms are without self, and be aware that all dharma-marks are without self-nature, without true existence—all are something given birth to, subject to arising, ceasing, impermanence, and change, and unreliable. In this way, one will no longer have any notions about dharmas, the mind will no longer depend on these dharmas, one will no longer give rise to mental activity regarding them, and one will no longer generate thoughts and concepts of attachment and discrimination—wholesome and unwholesome, true and false, right and wrong, beneficial or harmful, and so on.

Having realized that all dharmas are without self, without true existence, born from the false thoughts of one's own mind, one no longer applies the mind to anything, and thus becomes free from craving and attachment and free from the suffering of birth and death. Not applying the mind, one does not specially handle or deal with things; when matters come, one uses them, yet uses them without mind; when matters go, they cease, and the mind does not cling—the mind is unfettered, without hindrance or obstruction, free and at ease. Let all dharmas arise and cease on their own, coming and going, having nothing to do with me—this is great liberation.