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I read it as:
Everything is made out of bits.
The bits are not water or other elements (air, earth, fire, spirit?).
When you destroy something, the bits survive to make new somethings.
Time destroys everything.
In other words: Matter is indivisible, and eternal. Entropy causes everyting to degenerate, but you can make new thing from the eternal matter.
So all in all, a pretty modern idea, but as the OP says, it is in rather ornate language.
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Overhead, the Albatross hangs motionless upon the air,
And deep beneath the rolling waves,
In labyrinths of Coral Caves,
The Echo of a distant time
Comes willowing across the sand;
And everthing is Green and Submarine
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