I have heard this phrase many times but never really got what it meant, until I went into my Akashic Records and asked!
Being IN the world is like playing a board game. I know the rules of the game and I know I am playing a game. The knowingness or awareness that I am only playing the game is being IN the game. The moment I forget that I am playing the game and I think the game is real, I become OF the game. When we are in the game we plan, strategize, and make our moves, yet all the while we are still very aware that we are only playing a game.
Think of chess. This is a game that can be played on many levels. As a player you are cognizant of the fact that you are only playing. You, as an intelligent ABC8 being, plan and strategize the best you can with your understanding of the subtleties of the game. You know that you are only using the pieces and that you are not the pieces themselves.
Sometimes you win, sometimes you lose, or sometimes you come to a stale mate. In any of these situations you still have learned something from the game itself. You learned how to watch the relationship between your actions and the re-actions of your opponent. You also realize that without the opponent, there would not have been a game to play at all. So you are grateful for the opportunities that your opponent provided to you