The speaker describes walking up and down a hill that feels dull, and the poem's title, "Dulled," suggests the dullness is partly in the walker. Somewhere along the way a red fox was there, "where light and water met," and the speaker didn't see it. We only learn this afterward, which gives the poem a note of quiet regret.
The word "incognito" is the turning point. The fox wasn't hiding so much as going unrecognized, like someone in disguise on an ordinary street. Placing it at the edge of light and water makes the scene sound vivid and shimmering, a sharp contrast to the flat "dull place."
The mood is wistful and a little self-critical. Nothing dramatic happens, but the short, spare lines leave gaps, much like the gaps in the speaker's attention. The poem seems to say that a place feels dull when we stop looking, and that wonder can be right beside us while we walk past.