I think of it mechanically. Practically. It's said that way, in order to try to be gentle and graceful and artistic, but from a mechanical point of view, it would be more accurate to say something like:

"before you can figure out what's ACTUALLY true about yourself,you have to clear away the confusing stuff that you got from other people."

Or maybe add a note, like "the self you have to LOSE, is the one that was cobbled together from outside influences and wishful thinking."

Lots of people go horribly wrong trying to follow this saying, because it IS so badly expressed. They join cults or terrorist groups, or corporations, or political movements, and "lose themselves" by giving their self-guidance away to someone else. That's the WRONG kind of "lose yourself."