Firm not rigid.

Firm and soft/fluid are complimentary not contradictory. 

Firm to allow energy transfer.

We have to be firm for the energy to transfer smoothly through the kinetic chain.
Rigidity will block the flow, being too loose will cause us to be disconnected and also interfere with the flow of energy from segment to segment.

We are not only firm at kime but throughout the technique, even though the muscles activation is different at moving and at kime.

Aiko San and sensei Nishiyama constantly told me “keep the very inside (around the sacrum) strong and the outside soft and flexible." Of course, to be able to apply and get the feel of this we need proper training methods and good feedback.

Sport research confirms this, for force transfer between the legs to torso to arms and vice versa (through the sacrum), the smaller, local muscles around the sacrum have to activate and stabilize the sacrum.

Connection and disassociation.

We have to connect all segments of the body, but if we brace and over tense we cannot disassociate.

For example, to increase energy between the sacrum to the thoracic spine, the thoracic spine has to move slightly more the the sacrum and lumbar, this is disassociation. If we brace, they will move as one peace, if we are too loose they are not connected and energy will not transfer.

When someone is too rigid and brace at the shoulder or hip, we cannot disassociate and energy will not transfer smoothly at that joint.

Also, disassociation allows us for subtle adjustment at the hip (or shoulder) that are so important for smooth weight shifting and footwork as well as force production in technique.

Also, firmness allows for relaxation, for example, if the lower spine is not stabilized by the smaller, inner unit muscles, the bigger, global, movement muscles, have no working foundation and will tend to be to stiff.
When the inner unit muscles activate optimally to stabilize the spine, the bigger muscles  can be used to their full rate and potential, contraction/expansion.

Our body is the most complex machine ever created, so we must understand the complexity in order to achieve simplicity, at the end one does not think of any of these, when I face my opponent, I just want to make chance for finish technique, every thing else should just happen because you train hard and correctly.