“3) The Nefish HaChaim states in no uncertain terms that we are forbidden to relate to the world as everything being Elakus (pantheism). To do so would leave no room for the Torah and Mitvos which are premised on our relating to the world as we are designed to experience and understand it.”
This is one of the things which is a machlokes between The Nefesh Hachaim and the Baal Hatanya. (It is entirely possible that this machlokes has earlier roots but I am not in the know about that, and since we are speaking about Chabad chassidim and their beliefs I feel it is relevant to mention that there is a major machlokes about how tzimtzum works and The Baal Hataya holds one way while the Nefesh Hachaim holds the other way)