The statement is suggesting that justice that is rooted in vengeance does not solve what it purports to solve. The ancient notion of exacting the same amount of compensation for a transgression only continues to leave more in the hearts and psyches for those left behind. For example, if Person A kills Person's B relative, and Person B in turn kills Person A, there is little in way of justice addressed. Rather, it is a situation where an "eye for an eye leaves the whole world blind." This can be seen fairly clearly in the idea of groups of people holding resentment towards another group. The hurt the Israelis feel for terrorist attacks at the hands of the Arab population is the same hurt that the Arab population feels for the air raids and constant threats imposed by the Israeli community. At some level, both groups are exacting revenge on one another for wrongs being done, leaving nothing but hurt and misery as their only legacies.
I think that this statement is saying that taking revenge is a bad idea. It is saying that if you take revenge (like by taking an eye for an eye), you just end up hurting everyone.
I think we can see that in a lot of cases in our world. Countries or groups think that every time something is done to them, they have to do it back. One example I can think of is our own political parties. Starting about 20 years ago, it seems like they have been taking revenge on each other all the time. One party gets into power and abuses the other. Then the other gets into power and takes revenge. This has led to the parties being totally unable to get along with each other even when it would be good for us if they did. In this way, their revenge has made them all blind.
There is an endless cycle of revenge in Israel and The Occupied Territories of the West Bank and Gaza Strip, where people on both sides of the equation still avenge the murder of someone years or even generations ago. Rockets are launched at one side so bombs are dropped by the other. What has been the end result? A lot of people have been killed, mostly innocents.
We saw something similar play out in Bosnia during the Yugoslav Civil War, where age old ethnic rivalries turned into open warfare and genocide.
I agree with other posters in believing that this statement refers to the futility of seeking revenge, as in the end everyone is hurt. In Albania, for example, culturally, if a member of your family is killed you are honour bound to revenge that person and kill the murderer. The result is a lot of bereavement and sadness as communities, friendships and even families have been ripped apart by this revenge.
If everyone took revenge, there would be no one left. Consider the person who loses his house to bank foreclosure. You've heard the tale. He goes on a shooting spree and destroys the bank, or blows up the bank, either way symbolically taking the bank's "house" as they took his. Yet he does not benefit from this, and neither does his family. It only creates more suffering for everyone.
I would agree with poster #5 in that a good example of this in todays world would be the ongoing conflict in the Middle East. This is indeed a cylce that shows no sign of ending anytime soon.
The phrase "an eye for an eye and a tooth for a tooth" is used frequently to describe an approach of revenge and of disposing justice in which, people retaliate toward any harm done or losses incurred by them, by trying to cause equal harm to anyone seen to be the cause of the harm.
An approach like this tends to increase enmity and ill feeling towards each other among all people. A person may cause some harm to another unintentionally and perhaps without any fault on his or her part. It is also possible that a individual who is seen as the perpetrator of the harm has not caused it at all. But when the attitude of the people is to retaliate and take revenge in equal measure, the party harmed initially will inflict similar harms on the party supposed to be the cause of the harm.
Unfortunately the party thus becoming the target of retaliation is not likely to accept the retaliation as justified, and will indulge in counter retaliation. Thus a never ending chain of retaliation and counter retaliation will be started resulting in widespread violence and fight among people. Everyone in the society will be hurt seriously by such approach.
Figuratively we say that if we try to take an eye of a person or his near or dear one because he or she has caused me or my near and dear one to loose an eye, the other person will react in similar manner and this will start a chain reaction leading to people from both the warring factions becoming blind. And if this principle is adopted by all the people in the world the entire world will become blind.