Al-ṭarf refers to the movement of the eye or the gaze, from the root ṭ-r-f. Yaqṣuru here means to fall short or fail to reach the full extent of something.
The phrase yakādu l-ṭarfu yaqṣuru dūnahu does not claim a literal impairment of sight. It is a literary way of magnifying the horse’s impressive stature and visual appeal.