Taoism is an outlook on life that attempts to harmonize the individual will with natural and spiritual influences. Personal thoughts and actions alternately coincide or conflict with the Tao, which signifies the flow of the universe, or in some commentaries, the Will of Heaven.
Ideally, ones lives in wu-wei, which has been translated as “effortless action.” This does not imply inaction, per se. The Taoist can be quite active. But again, this action is in line with the Tao.
In the poetic Lao Tzu (also called the Tao-te-Ching), its author, Lao Tzu, tells of the 10,000 things (representing the visible world) that synchronously flow with an underlying ground of being. This ground cannot be named but he paradoxically calls it Tao (often pronounced Dow, as in Dow Jones).
Chaung Tzu’s writings are more mystical than Lao Tzu’s. Later developments in Taoism include the use of magic, alchemy and polytheistic worship. These trends were regarded by many Chinese as degradations of the original message—namely, the cultivation of virtue through naturalness and simplicity.
According to Wikipedia,
Popular Taoism typically presents the Jade Emperor as the official head deity. Intellectual (“elite”) Taoists, such as the Celestial Masters sect, usually present Laozi (Laojun, “Lord Lao”) and the Three Pure Ones at the top of the pantheon of deities. The pantheon tends to mirror the bureaucracy of Imperial China; deities also may be promoted or demoted for their actions. While a number of immortals or other mysterious figures appear in the Zhuangzi, and to a lesser extent in the Tao Te Ching, these have generally not become the objects of worship.†
Although many people idealize Taoism as some kind of neutral, natural “green” path, it’s not all so pretty. Some Taoists, for example, practice the barbaric ritual of animal sacrifice. Again from Wikipedia:
At certain dates, food may be set out as a sacrifice to the spirits of the deceased or the gods, such as during the Qingming Festival. This may include slaughtered animals, such as pigs and ducks, or fruit [emphasis added].†
But it’s not all bad:
Another form of sacrifice involves the burning of Joss paper, or Hell Bank Notes, on the assumption that images thus consumed by the fire will reappear—not as a mere image, but as the actual item—in the spirit world, making them available for revered ancestors and departed loved ones. At other points, a vegan diet or full fast may be observed.†
Some writers, such as Alan Watts, have popularized Taoism in the West with books like Tao: The Watercourse Way. Fritzoff Capra, Gary Zukav and several others have followed suit by relating the cosmology of Taoism to sub-atomic physics observations.
In China, itself, Taoism has a strong paranormal edge:
Fortune-telling—including astrology, I Ching, and other forms of divination—has long been considered a traditional Taoist pursuit. Mediumship is also widely encountered in some sects. There is an academic and social distinction between martial forms of mediumship (such as tongji) and the spirit-writing that is typically practiced through planchette writing.†
† All Wikipedia quotes from http://en.wikipedia.org/wiki/Taoism