In reading Yeats' poem, "Crazy Jane Talks With the Bishop," my sense of the "fair and foul" theme expressed is that good cannot exist without the bad.
It is a paradox of sorts, that something good must depend on something negative, but this is a philosophy long known to man: a popular version is the beauty of a rose accompanied by the danger of the thorns.
The bishop seems to be offering her advice to put away the needs of the flesh and turn her attention to her soul's destination after death:
Live in a heavenly mansion,
Not in some foul sty.
In her reply to the bishop, Crazy Jane says:
Fair and foul are near of kin,
And fair needs foul,' I cried.
The philosophy echoed here is that good cannot exist without bad: they are closely related. Jane admits that her friends are gone and perhaps they have all found themselves used bodily, giving in to sins of the flesh ("bodily lowliness" and "heart's pride").
But she refers then to love, twice. Women make choices when they are in love, but that is not to say that Love (capitalized by the author) will not also lead its "captives" to a place where the "mansion" of love sits in the most disgusting circumstances ("place of excrement"). In other words, she seems to say that something as wonderful as love will often lead one to a dark and "disreputable" place, for that is the other side of love, or all "good" things.
In Yeats' poem, "Crazy Jane Grown Old Looks At the Dancers," there is a sense that Jane's days of "dancing" are past, whether it refers to the literal dance or figurative. She watches two youthful dancers. The dance, I sense, is one of love. And when it seems that the man would hurt his partner in the dance, Crazy Jane can make no sound.
Or bodily movement did I dare...
The line repeated throughout the poem reflects the fair and foul theme: "Love is like a lion's tooth." This shows the kinship between the goodness of love, and the negligible space that separates that love from the devastation presented in the form of a lion's tooth: massive destruction.
When the dance continues, and the woman seems intent on killing her partner, still Jane does nothing.
Drew a knife to strike him dead,
I could but leave him to his fate;
I would assume that the poem is figurative in nature: death here referring to the end of love. Jane cannot see whether the dancers have destroyed each other or not: are they dead, or only seem to die? It is the transition from love to its absence, the bad that must accompany the good.
Then Jane recalls when she was younger, in the same situation, and she remembers that she cared not at all what was at stake as she immersed herself in love, dancing the same dance as the lovers before her had: but that even then, love and hate were akin, the lion's tooth waiting with the love.
God be with the times when I
Cared not a thraneen for what chanced
So that I had the limbs to try
Such a dance as there was danced -
Love is like the lion's tooth.
In both of these poems, the sense is that good cannot exist without the bad, no pleasure without the pain. And for Crazy Jane, she seems resigned to the fact that to enjoy the one, a person must be prepared to suffer the other, as it is a "package deal."
Crazy Jane drives her point home that nothing good or "whole" can be saved or protected from that which is rent (torn or broken: "bad").