It becomes the psychic posture, the perceptive stance that we take towards all things. At this point, everything is weighed in light of death. For instance, one begins to irreversibly understand that everything ends in death. At that point all of our actions, purpose, and meaning begin to merge into that realization. But there is still separation here.
Death is still outside peering in.
We are cleaning up much of the fear, but there lingers the residual dualism of life versus death. Now death begins to takes us headlong into the whole issue of time. If something ends, it must by definition be finite, imaginary, and limited. As long as our spiritual practice is based in time, meaning we are growing, cultivating, and becoming, then death stalks us all along the way. This takes us to the final conclusion of death.