I read and re-read this chapter about five times, each time learning something new.
These are the main impressions I was left with:
Art flows from the artist's sense of life, expressing: "This is what life means to me." In particular, an artist decides what is important about reality, according to his sense of life (revealing his metaphysics), and distils that into his art in a style compatible with his sense of life (revealing his psycho-epistemology - his view of man's consciousness and its efficacy.)
For the observer, the process is reversed. It is a process of abstraction. Reaction to art is positive, if the abstractions are in tune with ones own sense of life, if one exults: "This is what life means to me!" As Ayn Rand writes: "Art is man's metaphysical mirror."
Even though sense of life is the fountain of art, -esthetic- merit can not be judged by using ones sense of life - ie. emotional reactions. Art is a philosophical composite. That's why it's possible to say: "That is a great work of art (esthetically), but I don't like it (based on deeper philosophical objections and/or a sense of life judgement.)"
Communication or didactics is not (should not be?) the primary purpose of art. Concretising his vision of man, and of reality, is the primary purpose of an artist.
Theme was briefly mentioned as the link between subject and style, but I would like to find out more about this.
Lastly, and in summary, I quote: "An artist reveals his naked soul in his work - and so, gentle reader, do you when you respond to it."
Please critique if I got something wrong, and share your own impressions of this wonderful chapter.