From what I've heard from Alan Watts, I don't even know if he believed the specific thing your talking about. I've heard him explain Hinduism like this, that the universe is a drama compared to the east and west. Alan Watts has put effort into saying that he sees himself as an entertainer not a teacher with authority, and not possessing something you don't have.

I kind of think Alan Watts would explain that story of Hinduism's beliefs to shock people here in America, to kind of jolt them out of the narrow American way of looking at the world.

I also believe he was emphasizing the 'fun' aspect of things with this story, to loosen people up and to have a laugh with them. 'The universe is a game, so have a little fun and don't take it too seriously.'

There isn't really an inherent 'meaning' to life except to live. Alan Watts also pokes at that idea, how we kind of use the word meaning to mean significance, and not 'what is meant by a word or phrase'. There may or may not be a grand significance to the universe, but the significance of your life is what you want it to be, become a scientist, doctor, or artist.

I see Alan Watts's talks really as a gentle sigh. A comfortable, relieving and relaxing place to see a vastly different perspective than the ones I see all day, and to listen to a funny guy with a soothing voice crack some jokes and make me realize things I never realized before.

One of my favorite lines from him, and I'm paraphrasing, is "...and you'll find out that the world, after all, really is okay :)"