It's about exploring different spiritual possibilities, eg contrasting a zen-like meditative lifestyle ('You just stayed in your room') with a more dynamic, searching lifestyle ('I travelled round the world for years'). When I first heard the song I believed that the 'whole of the moon' was regarded as the superior option, but now I think that the lyricist doesn't really regard either the more active or passive side of life as being superior.
For example, seeing the planets is not necessarily inferior to seeing the whole of the moon. Similarly, the passive character gives a rainbow which the more active being can hold in his/her hands...both are positive.
Some of the references in the song echo Neil Young songs (turnstiles - 'For the Turnstiles'; whole of the moon - 'Harvest Moon').
Maybe the lyricist (Mike Scott?) was thinking of bedsit/student room record sessions where the people listening to records listened to folky/rock music such as Young and Bob Dylan whilst hoping to attain inspirational music, especially visionary metaphors, fantasy elements (Brigadoon etc) and even apocalyptic images.
He might have been trying to express the feelings of frustration that younger songwriters feel when trying to emulate great lyrics...I am unsure, but in any caseI think it is a sign of a good song that it can be interpreted on more than one level and provoke thought.
I am unsure what the lyrics 'too high, too soon' mean but it could be an allusion to another songwriter with a less happy career, or maybe even an allusion to a love which had aspired too highly...when I first heard the song I thought it was a love song for a partner who had to stay at home (or chose to do so) while the musicians travelled the world.
These are just a few of the ideas that the song makes me think about...I don't know if Mike Scott has given a more definitive interview about the meaning. What do you think it means?