The adjective "blind" that begins this verse could also be a verb. The form is the second person in the middle voice, having the sense of "you make yourselves blind."
There is no "is" in the phrase, "what is better" it is assumed from the two subject words (what,better) without a verb.
The word translated as "sanctify" and "make holy" has the sense of "purifying" something, setting it apart for the worship of the Divine. Purification rituals always involved some form of cleansing, with water or, on an altar, with fire. The "gift" here was burnt on an altar, but some of it was consumed.