In this particular quotation, Frankenstein shows that he's understood the error of his ways. He's come to realize that there are limits to what humans can do and that it's best for everyone if we stay within those limits. Sadly, Victor only came to realize this after he transgressed the...
In this particular quotation, Frankenstein shows that he's understood the error of his ways. He's come to realize that there are limits to what humans can do and that it's best for everyone if we stay within those limits. Sadly, Victor only came to realize this after he transgressed the bounds of human knowledge in carrying out an experiment that unleashed a hideous monster upon the world.
In creating the monster, Frankenstein was playing God, putting himself in the position of the Almighty by seeking to create a race of creatures. The results of Victor's hubris have been catastrophic. Playing God has been a disaster for both him and humanity as a whole.
There's nothing wrong with knowledge per se, of course. And Frankenstein isn't trying to suggest that knowledge in itself is the problem. But the acquisition of knowledge beyond certain bounds can be incredibly dangerous, as Victor knows from personal experience. And because of his experience, he's come to believe that, on the whole, it is better to have limited horizons than to try and transcend them by exceeding one's nature and playing God.
In the given passage from chapter 4 of the novel, Frankenstein asks Walton to learn from the mistakes he, Frankenstein, has made. He wants Walton to listen carefully to the story he is about to unfold and to learn from the example of his own life, as revealed by that story. The example that the proceeding story will unfold is the example of a man who tried to know more than any man should be permitted to know. Frankenstein created life, and at this time, in the late nineteenth century, people generally believed that only God should be able to create life. When Frankenstein created life, he thus transgressed his limitations as a man and became, at least temporarily, something close to a god.
Just as Prometheus, Icarus, and Lucifer were punished for trying to become like gods, so too Frankenstein is punished. The moral of the story is that humans should accept their limitations and will be punished if they try to transgress them. This is what Frankenstein means when he tells Walton that the man "who aspires to become greater than his nature will allow" will not be as happy as the man who accepts his limitations, or, as it were, "believes his native town to be the world."
A key theme in Gothic fiction is that knowledge is not necessarily a good thing. Gothic fiction challenges the idea, popularized in the Enlightenment era, that the pursuit of knowledge is man's raison d'être and suggests instead that some knowledge, too much knowledge, or knowledge that is abused can lead to devastating consequences. This is why Frankenstein warns Walton about "how dangerous is the acquirement of knowledge." He means that it is dangerous to try to acquire knowledge that only God should have, because man is unable to cope with or control that knowledge.
Victor has tried to play God, has tried -- in fact -- to be like the Titan Prometheus, who stepped in to help his brother Epimetheus create humankind when Epimetheus mistakenly made all of the animals first, giving them all the "good" qualities (i.e. thick hide or fur to protect them, sharp teeth and claws to help them to eat, etc.). Prometheus had to get creative to come up with qualities that would help us to be the best: he made us walk upright like the gods, and he gave us the fire that would help defend us from the cold and help us to cook the meat that our teeth could not otherwise chew. Victor has tried to create a new human species, a species that he expected would "bless him as its Creator." He wanted to perfect something that he saw as imperfect -- human frailty and fragility -- but he learned, too late, that human beings are not meant to create in this way: his creation turns out to be horrifying, perhaps in part because it was made by an imperfect (i.e. human) creator. Thus, when Victor describes the dangers of striving to be "'greater than [one's] nature will allow,'" he also refers to the dangers of a human being who tries to play God. Victor's hubris results in tragedy for so many people, including himself and the individual he creates.
Victor Frankenstein certainly shows that he is a smart man when he states the following in Chapter Four of Mary Shelley's novel Frankenstein:
Learn from me, if not by my precepts, at least by my example, how dangerous is the acquirement of knowledge and how much happier that man is who believes his native town to be the world, than he who aspires to become greater than his nature will allow.
What Victor is saying here is that it he hopes that people use his mistakes as an example. Victor knows that knowledge can be dangerous at times. By this, he refers to the fact that sometimes "ignorance is bliss" based upon the fact that, sometimes, knowledge does more harm than good.
In the second part of the quote, Victor is admitting that people who look too far beyond their own capabilities are wrong. For Victor, the reference to a person's native town shows that a person should recognize and accept their own limitations. By looking at the entirety of the world as one's background, one can end up causing more, again, harm than good.
In short, people should be happy with what they have. Outside of that, the quest becomes too burdensome, too demanding, and too dangerous. Victor, in the quote, is simply giving out some amazing advice--know your limitations and abide by them.