The way that the Laozi (Daodejing) and the Zhuangzi discuss knowledge is subtly different. The Laozi is secretly a very political text and has to be read in the context of other philosophies which emerged around the same time. These philosophies, including what was later called "Confucianism," argued that a virtuous ruler cultivates himself and, in doing so, transmits his virtue on down to his subjects. The Laozi, on the other hand, argues that a good ruler keeps his people poor and stupid (to totally butcher it, something along the lines of "they'll be happy if they don't know what they're missing out on"). In the Laozi, knowledge is dangerous for the people but not for the ruler.

In the Zhuangzi, knowledge is often discussed in terms of the interconnectedness of all things. The story cited in the OP is one example of several anecdotes which describe a skilled craftsman who is instinctively good at what he does but is unable to describe what he's doing in a formulaic manner. (Again, note the contrast to the "Confucian" texts which are very prescriptive about self-cultivation - in other words, they're all about following precise formulae.)

For background, I have undergrad/graduate degrees in Chinese Literature focusing mostly on ancient/early medieval texts.

>The Laozi, on the other hand, argues that a good ruler keeps his people poor and stupid

This is a bit different from my understanding of Daodejing. Do you know which chapter? I quickly checked the original text and only the 65th chapter mentioned along the lines "commoners shouldn't be taught to be cunning instead of honesty, otherwise difficult to rule" <excuse crappy translation>

Off the top of my head, Chapter 80 is a good example of the "idealized state." (I do think some things are often lost in translation; many of the freely available translations on the internet tend to read into the Laozi what they "think" it means.) There are a bunch of other references too though. It's also worth remembering that these are composite texts - there was no "single" author so if things occasionally seem self-contradictory, that's pretty natural.

That's absolutely true. From the fact that there were so many equally ancient text commenting and interpreting the the original text (later also become canonical sources), it could be contradicting itself too. My views were basically formed via my background and what commonly understood in my upbringing.

Yes, for sure. It's also the case that our understanding of ancient texts has changed a lot over the past 20-30 years as more archaeological finds have been discovered (e.g. Mawangdui). I once had a Professor who tried to discourage me from focusing so much on ancient literature because he joked that all my research would be out of date in 20 years :D