This propensity is to truck, barter, and exchange one thing for another. Now Smith asserts that it is propensity in human nature, but that it is most likely more a product of reason and speech than anything else. One such form is to interest a person's self-love, since benevolence cannot be expected from everyone. This is how cooperation and assistance can be obtained. It is by treaty, by barter, and by purchase, that we obtain from one another the greater part of those mutual good offices which we stand in need of, so it is this same trucking disposition which originally gives occasion to the division of labor.
Exchange is a mode of cooperation that society uses to support itself and the individuals within it.
If people didn't have this propensity then everyone would just provide for themselves, but instead the division of labor arises because people do this. Smith talks about people and their place in the division of labor. He states that it is not so much out of the natural abilities of people that people are placed within certain occupations. But rather it is more a consequence of the division of labor that people find themselves in different occupations. It is from habit, custom and education that people find their place within the division of labor.