Now things get a little mysterious, but stick with us Shmoopers. We'll break it down for you.
First, the speaker imagines that somewhere, in its dreams or in its waking life, the skylark can see and understand ("deem") things about the true nature of death. This reminds us that he thinks of the skylark as much as an immortal spirit being as an actual natural creature.
Where did death come from, you ask? Well, he's been talking about sadness and pain, and death could be the root of all that suffering.
Things more true and deep Than we mortals dream,
The skylark can see beyond even the dreams of mortals. It understands the deep truth about death, because it cannot die.
Or how could thy notes flow in such a crystal stream?
Why does the speaker think that this bird can see beyond all human perception? Because that's the only way he can imagine that it could make such beautiful music (like a "crystal stream").
Remember, this all started because he heard such a beautiful bird song that he thought some immortal spirit was singing.