... according to tradition, the original sorcerer came out of the soil in form of a crab.
This is a myth about the origin of sorcerers. The Kula had myths about the origin of magic and sorcery as to have come out of the soil. The crab is an omen that signifies black magic; therefore, it is associated with sorcery.
... the difficulty is the same as in explaining many contemporary examples of results achieved by miracles and faith healing such as Christian science and Lourdes, or in any cure by prayers and devotion.
The narrator explains the view of the Kula on the healing power of witchcraft. The aim of the narrator is to liken the belief of the Kula in regards to healing to that of Christianity and faith healing.
... he is in it, and cannot see the whole from the outside.
This quote is in regards to how the Kula view their culture and social, political and economic organization. The Kula do not see their organization as wholistic since they're in the system. The ethnographer sees the Kula tradition as a wholistic one. This is because he is studying them as a people and is not part of them.
... myth, magic and tradition have built up around it definite ritual and ceremonial forms, have given it a halo of romance and value in the minds of the natives, have indeed created a passion in their hearts for this simple exchange.
This is in view of the trade of armshells and necklaces among the Kula. It is not just trade to them; it has an emotional attachment. This is because the Kula have attached a great importance and love for their armshells.
... a happy go lucky child of nature... waiting till the ripe fruits to fall into its mouth.
This was the view that the narrator had about the Kula when he first arrived. From their easy going attitude, he thought that they were lazy and ate from the abundance of nature. The statement is metaphorical for the ripe fruits signify food.