The Creator purposefully divided our perception into external and internal in order to give us the ability to recognize the opposition between reception and bestowal. If we felt everything only inside ourselves, we would not be able to understand it. We would be going around in circles like a dog chasing its own tail, while staying in the same place.
For example, each of us has numerous negative qualities that we may dislike, such as a weakness for lying, dominating over others, arrogance, and theft once in a while. I may hate all of these qualities, but they are all mine. Therefore, I acquit myself. But if I see someone else doing the same thing, then I am ready to kill him. If I always perceived everything inside of me, then I wouldn’t be able to get out of myself or my ego, and shift to the side of bestowal.
“Every person judges others to the extent of his own deficiencies.” This means that by perceiving these qualities as external to me, I see their true form. If they were in me, I wouldn’t relate to them objectively, since they are mine. For example, see if you can convince a mother that her child is not intelligent or beautiful. You can’t; she will always think that he is the most beautiful, intelligent and kind child in the world.
But since I relate to the external qualities as foreign, I view them with animosity and hatred, and therefore I am able to see these qualities (which are actually my own) in their true form. I am able to look at them without prejudice; I can criticize them wisely and correctly, and my ego helps me with this analysis, like a strict judge that pays attention to the minute details, revealing the true corrupted qualities.
However, later on I reveal that all of this was mine; it exists inside me, but because of my extreme hate for all other people, I see everything to the extent of my own corruption. Yet, others are not guilty of anything! It only seemed to me that one person was a thief, another was a liar, and I was right to hate all of them. Now, however, I see that my egoistic desire was really at fault. Yet, the external vision had opened my eyes and allowed me to recognize the deficiencies, in order to then learn that they are inside of me.