The first four lines establish the poet's belief that when we are in love, we act in ways that cause us harm:
. . . and those who deviate from its rules
Are rebels against Nature, and their efforts harm themselves.
In other words, because our eyes are made to show the soul's inner light, and the godly part "ought to be King," that is, it ought to rule our behavior, when we use our eyes for something else, we are violating Nature's laws and will therefore harm ourselves.
In the second four lines, the poet acknowledges that what we perceive as Cupid's arrow is simply an image that we create, and because we are foolish, we worship the arrow in our hearts as if we were in a church, and Cupid, a false god, puts the real church and clergymen out of work. In essence, Sidney argues that, as lovers, we ignore Nature and have placed a false god (Cupid) where the Christian God ought to be.
The poet, in the concluding seven lines, knows what he is supposed to do, but cannot:
True, that true beauty virtue is indeed,
Whereof this beauty can be but a shade,
Which elements with mortal mixture breed:
The poet understands, of course, that one's inner virtue, not outward beauty, is "true beauty" and that outward beauty is only a shadow of one's inner virtue, and these two elements are mixed together in mankind.
Sidney knows that we are only on earth for a short journey--"we are but pilgrims"--and our souls should be focused on Heaven, but he is compelled to love Stella despite what he knows he should be doing.
This sonnet, then, is about the replacement of inner beauty--virtue--by a lady's outward beauty, and the poet is completely aware what he really should be attracted to virtue (inner beauty), but his lady's physical beauty is so compelling that he simply cannot help himself.