The spirit is for Nietzsche the totalizing impulse inside of us. It seeks to incorporate everything into itself and thereby create a smooth whole within us. The spirit's strength is in bringing things together, creating meaning out of chaos, and giving us a feeling of completeness. The spirit's weakness is that it ignores difference and information that would complicate the purity of it's seamless vision.
The yang to the spirit's ying is the "internal No" or "the seeker after knowledge." The "internal No" rebels against the smooth consistency of the spirit and denies the spirit rest. Similarly, "the seeker after knowledge" betrays the spirit by closely investigating details and differentiating between this and that. The seeker after knowledge delights in multiplicity and inconsistency. This is a destructive force within us that tears down our assumptions and damages our sense of security.
I think Nietzsche is really on to something here. Particularly the designation of "spirit" to the unifying force makes a lot sense - is not all spiritual activity an attempt to find an underlying whole in the chaos of the universe. Spirituality is the search for meaning in spite of the mess. Yet without skepticism spirituality loses it's energy and becomes monolithic and lifeless.
Both of these forces within each person are essential to creativity. The spirit brings phenomenon together and tries to make sense of them. In turn the destructive force, the internal No, breaks apart the spirit's unifying story and forces a spiritual reanalysis and re-synthesis.
Nietzsche's philisophical project is to elevate and reinvigorate the destructive force: the internal No, the self-destructive betrayal of the spirit. He wants to push our investigations deeper and push us into a continuous "downgoing" ala Zarathustra. I'm also a big fan of this idea in Nietzsche's philosophy - intellectual masochism just makes sense. Without it, philosophy, and life, become stale. Nietzsche's work is thus to breathe fresh air into the dusty annals of philosophy.
Nietszche fans, am I getting this right?