The Holy Roman Empire’s main strength was that it was the most organized political entity in Europe at its time. However, this strength was offset by many weaknesses that prevented it from becoming a true empire.
The major strength of the empire was its organization. The emperors had strong military organizations relative to others during the time when the empire was growing. It had enough of an organized government to help administer the military and the lands that it came to dominate. It also produced a few very capable emperors such as Otto I who had the talents and abilities that allowed them to expand the empire.
All this being said, the Holy Roman Empire also faced weaknesses and limitations that prevented it from truly dominating its territories. Your text emphasizes one major limitation. This was the existence of the papacy and the power that that institution could wield. The Holy Roman Emperors were in constant conflict (or at least competition) with the papacy for power. Popes tried to limit the powers of the emperors and entered into alliances with various powerful men to try to prevent the Holy Roman Empire from spreading too much. Your text says that this is what kept the Holy Roman Empire from becoming a true empire.
I would argue that there were at least two other limitations. First, there was the fact that technology prevented any central ruler from exerting strong control over a large territory. Communications were so slow that it was impossible to rule a large area from a central location. Therefore, emperors had to rely on local lords to administer their governments. This led to a situation where the local lords could try to build their own bases of power. Second, there was the fact that Europeans lacked, at this point, any idea of loyalty to a central government. People typically felt loyalty to their own lord, and felt lesser degrees of loyalty to central rulers. This made it much harder to create a Holy Roman Empire in which most people would identify first as members of that empire, rather than as subjects of their own local lord.
Thus, organization and military power gave the Holy Roman Empire strength, but technology, ideology, and the presence of competition from the papacy limited that strength.