The passage is punctuated slightly wrong, it should be 葵丘之會，諸侯束牲、載書而不歃血: At the assembly at Kuiqiu, the feudal lords bound the sacrifice and placed their written pledges on it, but did not make blood oaths (i.e. they did not kill animals as part of the ceremony of allegiance).
The assembly at Kuiqiu marked the ascendance of Qi Huan gong 齊桓公, the first of the five feudal leaders (五霸) of the Spring and Autumn period, and the decline of the Zhou royal house. It was a meeting convened by Qi, at that point the most powerful of the feudal states, to make an alliance between the major rulers of the time.
The expression sha xue is often used in the longer phrase 歃血為盟. An animal sacrifice was killed and its blood wiped on the lips. The written agreement was then placed on the sacrifice and the whole thing buried. This action was part of the regular ceremony of alliance between states, and was performed either by the leader of the state or his representative. It could also occur between lesser figures, and different animals were supposedly used, depending on their status
The idea was that putting blood on the mouth solemnified the words of the treaty of alliance, and signified the punishment that would come on whoever broke the agreement (or at least that's one interpretation).
This passage is from Mengzi, who felt that Qi Huan gong's decision not to use blood in the ceremony of allegiance between the feudal lords was superior to later practice using blood, which involved the idea of divine retribution, and thus departed from the mutual trust that was essential for the allegiance.
On the other hand, according to Mengzi, Qi Huan gong, by convening the assembly, arrogated to himself a power that belonged to the Zhou royal house, and had therefore also offended against virtue.
Later note: There is an article that discusses the significance of these "covenant tablets" here
