It means that Edo is the world of the fallacious, protean, where people circle around a ring like an inchworm does, and suffer by tying themselves up like a silkworm does within their cocoon.
虚偽の世界、流転の世界、尺取虫が丸くなって丸いものを廻るように流転し、蚕の繭の如く自らを縛りつけ苦しむ世界が穢土だという。