Place in the book. A two-line aphorism-syllogism: on a sober view of others' badness. The discipline of action (how to regard the bad).
The syllogism. Two premises: (1) to pursue the impossible (τὰ ἀδύνατα διώκειν) is madness (μανικόν); (2) it is impossible (ἀδύνατον) that the bad (φαῦλοι) should not act badly. The unspoken conclusion: to demand that the bad not be bad is the same madness. Hence — neither surprise nor anger at them.
Application. The practical sense is unfolded in Med. 9.42: once you remind yourself that the bad cannot but exist, you grow gentler toward them. This is not resignation but realism: to be angry at a bad man for being bad is like resenting a fig-tree for bearing figs (cf. Med. 4.6, the image of the fig-tree). It joins the doctrine that "men do wrong involuntarily" and the anticipation of meeting them (02-01).
Discipline and parallels. The principal discipline is action (how one regards others' faults); the secondary is desire (the acceptance of the necessary). Parallels: Med. 9.42; 4.6; 8.15 (the fig-tree); 2.1 (02-01).