5Can native speakers understand this writing? Yes
It's driving me crazy, it's too abstract to understand. Actually, it's pretty concrete (Chrysanthemums and horses) in the first half; then the writer pulls back to make general points.
Can you understand what the underlined means? Yes
It's all confusing!
!!It may be difficult to understand if you don't know what the individual words mean. I'd hardly call that 'confusing'.
"In short, good and bad can be applied to the moments in a necessary evolution only by ascribing an imaginary superiority to the last term; and so one type cannot logically be preferred to another."
A rough paraphrase of this is: "To sum up briefly, we can use the words 'good' and 'bad' about any particular moments in an evolutionary process only if we consider that the last (most recent) example of the evolutionary process is superior - and any such 'superiority' is merely imaginary; and so, logically, we cannot prefer one type to another."
Previously, the writer has given two concrete examples of this. In the first, the writer says that we cannot claim that the modern chrsanthemum is better than earlier versions on the grounds of it being more 'chrysanthemum-like'; that is true only if we make the modern version the standard of 'chrysanthemum-ness' In the second, the writer asks who is to say whether the modern or the Eocene horse is more horse-like. If we cannot say this, then we cannot say that the Eocene horse is inferior to the modern one.