Destruction occurs when living beings and their energies fall into sleep along with him. [2.10.6]
Here, “living beings” refers to the souls within the cosmos. Their “energies” are all their ambitions and self-conceptions. “Along with him” means along with Hari, Viṣṇu. When Hari falls asleep, all living beings also fall asleep. If they still cling to their ambitions and self-conceptions, this fall into sleep is known as “destruction.”
Hari “falling asleep” means that he closes his eyes towards the external world. The living being “falling asleep” means that he becomes completely inactive as a result.
Liberation occurs when a living being lets go of all external self-images and perfectly embraces its own true form. [2.10.6]
“All external self-images” refers to the ambitions and self-concepts that a living being accepts out of ignorance and foolishness. A living being who lets go of these and embraces his own true form does not experience the destruction as such, instead he gains liberation.
[This is an English rendering of Śrī Jīva Goswāmī’s Tattva Sandarbha, 57.3]