Rabbi Schneur Zalman of Liadi elucidates the concept of tzimtzum as a metaphorical and rather psychological notion rather than a literal constriction.
כִּי הִנֵּה, סִיבַּת וְטַעַם הַצִּמְצוּם וְהַהֶסְתֵּר הַזֶּה, שֶׁהִסְתִּיר וְהֶעֱלִים הַקָּדוֹשׁ־בָּרוּךְ־הוּא אֶת הַחַיּוּת שֶׁל הָעוֹלָם כְּדֵי שֶׁיִּהְיֶה הָעוֹלָם נִרְאֶה דָּבָר נִפְרָד בִּפְנֵי עַצְמוֹ, הִנֵּה הוּא יָדוּעַ לַכֹּל, כִּי תַּכְלִית בְּרִיאַת הָעוֹלָם הוּא בִּשְׁבִיל הִתְגַּלּוּת מַלְכוּתוֹ יִתְבָּרֵךְ, דְּ״אֵין מֶלֶךְ בְּלֹא עָם״, פֵּירוּשׁ ״עָם״ – מִלְּשׁוֹן ״עוֹמְמוֹת״, שֶׁהֵם דְּבָרִים נִפְרָדִים וְזָרִים וּרְחוֹקִים מִמַּעֲלַת הַמֶּלֶךְ, כִּי אִילּוּ אֲפִילוּ הָיוּ לוֹ בָּנִים רַבִּים מְאֹד – לֹא שַׁיָּיךְ שֵׁם ״מְלוּכָה״ עֲלֵיהֶם, וְכֵן אֲפִילוּ עַל שָׂרִים לְבַדָּם, רַק ״בְּרוֹב עָם״ – דַּוְוקָא – ״הַדְרַת מֶלֶךְ״. וְהִנֵּה, מִכָּאן יֵשׁ לְהָבִין שִׁגְגַת מִקְצָת חֲכָמִים בְּעֵינֵיהֶם, ה׳ יְכַפֵּר בַּעֲדָם, שֶׁשָּׁגוּ וְטָעוּ בְּעִיּוּנָם בְּכִתְבֵי הָאֲרִ״י זִכְרוֹנוֹ לִבְרָכָה, וְהֵבִינוּ עִנְיַן הַצִּמְצוּם הַמּוּזְכָּר שָׁם כִּפְשׁוּטוֹ, שֶׁהַקָּדוֹשׁ־בָּרוּךְ־הוּא סִילֵּק עַצְמוֹ וּמַהוּתוֹ חַס וְשָׁלוֹם מֵעוֹלָם הַזֶּה, רַק שֶׁמַּשְׁגִּיחַ מִלְמַעְלָה בְּהַשְׁגָּחָה פְרָטִית עַל כָּל הַיְצוּרִים כּוּלָּם, אֲשֶׁר בַּשָּׁמַיִם מִמַּעַל וְעַל הָאָרֶץ מִתָּחַת. וְהִנֵּה, מִלְּבַד שֶׁאִי אֶפְשָׁר כְּלָל לוֹמַר עִנְיַן הַצִּמְצוּם כִּפְשׁוּטוֹ – שֶׁהוּא מִמִּקְרֵי הַגּוּף – עַל הַקָּדוֹשׁ־בָּרוּךְ־הוּא, הַנִּבְדָּל מֵהֶם רִיבּוֹא רִבְבוֹת הַבְדָּלוֹת עַד אֵין קֵץ; אַף גַּם זֹאת, לֹא בְדַעַת יְדַבֵּרוּ, מֵאַחַר שֶׁהֵם מַאֲמִינִים בְּנֵי מַאֲמִינִים שֶׁהַקָּדוֹשׁ־בָּרוּךְ־הוּא יוֹדֵעַ כָּל הַיְצוּרִים שֶׁבָּעוֹלָם הַזֶּה הַשָּׁפָל וּמַשְׁגִּיחַ עֲלֵיהֶם, וְעַל כָּרְחֲךָ אֵין יְדִיעָתוֹ אוֹתָם מוֹסִיפָה בּוֹ רִיבּוּי וְחִידּוּשׁ, מִפְּנֵי שֶׁיּוֹדֵעַ הַכֹּל בִּידִיעַת עַצְמוֹ, הֲרֵי כִּבְיָכוֹל – מַהוּתוֹ וְעַצְמוּתוֹ וְדַעְתּוֹ הַכֹּל אֶחָד.
The cause and reason for this tzimtzum and concealment that the Holy One, blessed is He, obscured and hid the life-force of the world to make the world appear as an independently existing entity [is as follows]: It is known to all that the purpose of the creation of the world is for the sake of the revelation of His kingdom, blessed be He, for “there is no King without a nation.” The word am (nation) is related etymologically to the word ommemot (concealed, dimmed), for they are separate entities, distinct and distant from the level of the king. For, even if the king had very many sons, the name kingdom would not apply to them, nor even to nobles alone. Only “In a multitude of people is the glory of the king.” In the light of what has been said above it is possible to understand the error of some, scholars in their own eyes, may G–d forgive them, who erred and misinterpreted in their study of the writings of the Arizal, and understood the doctrine of tzimtzum, which is mentioned therein literally—that the Holy One, blessed is He, removed Himself and His Essence, G–d forbid, from this world, and only guides from above, with individual providence, all the created beings which are in the heavens above and on the earth below. Now, aside from the fact that it is altogether impossible to interpret the doctrine of tzimtzum literally, [for then it] is a phenomenon of corporeality, concerning the Holy One, blessed is He, who is set apart from them [i.e., from the phenomena of corporeality], many myriads of separations ad infinitum, they also did not speak wisely, since they are “believers, the sons of believers” that the Holy One, blessed is He, knows all the created beings in this lower world and exercises Providence over them, and perforce His knowledge of them does not add plurality and innovation to Him, for He knows all by knowing Himself. Thus, as it were, His Essence and Being and His Knowledge are all one.