1 It is for freedom that Christ has set us free. Stand firm, then, and do not let yourselves be burdened again by a yoke of slavery.
2 Mark my words! I, Paul, tell you that if you let yourselves be circumcised, Christ will be of no value to you at all. 3 Again I declare to every man who lets himself be circumcised that he is obligated to obey the whole law. 4 You who are trying to be justified by the law have been alienated from Christ; you have fallen away from grace. 5 For through the Spirit we eagerly await by faith the righteousness for which we hope. 6 For in Christ Jesus neither circumcision nor uncircumcision has any value. The only thing that counts is faith expressing itself through love.
7 You were running a good race. Who cut in on you to keep you from obeying the truth? 8 That kind of persuasion does not come from the one who calls you. 9 “A little yeast works through the whole batch of dough.” 10 I am confident in the Lord that you will take no other view. The one who is throwing you into confusion, whoever that may be, will have to pay the penalty. 11 Brothers and sisters, if I am still preaching circumcision, why am I still being persecuted? In that case the offense of the cross has been abolished. 12 As for those agitators, I wish they would go the whole way and emasculate themselves! (NIV)
In many ways this section presents the whole letter in a nutshell. He begins by reiterating what he has said in several different ways in chapter four. If you think that anything other than faith in Jesus is necessary to be a full member of the people of God then you're mistaken. Any attempt to conform to Jewish identity in order to ensure full acceptance undoes the work of Christ on the cross and makes it worthless for you. For Paul both non-Christian Jews and pagan Gentiles are in the same boat, on the outside of God's new creation and looking in.
The issue for Paul here is one of identity. Where is your identity found? The teachers were telling there converts that they needed to add Jewish identity onto their identity as followers of the Messiah (this isn't as ridiculous as it sounds - the Messiah, and Paul, and the 12, and Abraham were all Jewish). In verse three Paul warns the Galatians that you only get one identity. It's all or nothing. The status we hope for isn't manifest here and now by practices of the Torah (or any other cultural standard of morality), rather it's in an active faith. Verse 6 is probably a quick mini response to the claim that not requiring works of Torah would lead to sinful behavior. No, because faith in the Messiah expresses or manifests itself in actions that mirror the way of life of the Messiah.
Verses 7-10 have the function of softening some of the blow that he has periodically laid on the Galatians. He's called them foolish among other things. Here he places the blame squarely on the Teachers for this debacle. He encourages them to resist and even tells them that he knows that they'll make the right decision. One of the toughest verses to crack in the entire letter is verse 11. The most likely interpretation (Dunn provides a nice overview pp. 278-80) is that the Teachers told the Galatians that he did not preach circumcision to the Gentiles (this interpretation implies that the congregation is largely Gentile - which makes sense overall) but that he did to the Jews. This may be based on his circumcision of Timothy reported in Acts 16:3. Still it's hard to know what they thought this, and Paul is shocked by the suggestion too.
Paul closes the section with a rather ribald joke. It's important to understand, additionally, that eunuchs and those with deformed penises were excluded from the Jewish assembly. Dunn summarizes this verse well, 'It has the force of a reductio ad absurdum argument: one slice of the knife = acceptability to God; another slice of the knife = total unacceptability to God' (284).