Yi is righteousness, rightness or appropriateness, the disposition to do what is fitting because it is fitting. In Confucian ethics it is paired with ren among the cardinal virtues, and in Mencius' four-virtue scheme it stands second, grounded in the innate sprout of shame and dislike for what is wrong.
Its defining contrast is with li meaning profit or benefit, a different word from the li meaning ritual. The Analects state the contrast flatly: the noble person understands what is right, the small person understands what is profitable. Mencius opens his book with it. Asked by King Hui of Liang what benefit he has brought to the state, he replies that the king should speak of humaneness and righteousness rather than of benefit, and argues that a state in which everyone from the ruler downward asks what is in it for them will tear itself apart. The opposition became one of the tradition's fixed points and it was not merely theoretical: the Han court debates on the state monopolies of salt and iron were conducted substantially in these terms, and Song statecraft argument returned to it repeatedly.
Yi also supplies the tradition's account of when rules yield. Mencius is asked whether it is true that men and women should not touch in handing things to one another; he agrees; he is then asked whether a man should pull out his drowning sister-in-law by the hand. He answers that not to do so would be the act of a beast, the ritual rule is the norm, and the rescue is quan, weighing, the exercise of discretion in the circumstances. Yi is the capacity to judge what a situation actually requires, which is how the tradition avoids reducing ethics to rule-following without collapsing into arbitrariness; the standard is what a person of cultivated judgement would do, not what a principle dictates.
Mozi used the word differently and argued that righteousness must be assessed by benefit to all impartially, which is precisely the identification Confucians refused; the disagreement is among the sharpest in classical Chinese philosophy and each side understood exactly what the other was claiming.
In later usage yi extends to loyalty and honour among sworn brothers and outlaws. The bandits of the Water Margin are described in these terms, and the word carries into the popular ethic of jianghu, where its sense is closer to keeping faith with one's fellows than to abstract rightness. That range, from Mencius arguing with a king to an oath sworn between outlaws, is a useful illustration of how a classical term actually lives in a culture.