​MN 29 Mahasaropama Sutta: The Greater Discourse on the Simile of the Heartwood 

Thus have i heard. 

On one occasion the Blessed One was living at Rajagaha on the mountain Vulture Peak; it was soon after Devadatta had left. There, referring to Devadatta, the Blessed One addressed the bhikkhus thus:  "Bhikkhus, here some clansman goes forth out of faith from the home life into homelessness, considering: 'I am a victim of birth, ageing, and death, of sorrow, lamentation, pain, grief, and despair; I am a victim of suffering, a prey to suffering. Surely an ending of this whole mass of suffering can be known.' When he has gone forth thus, he acquires gain, honor, and renown. He is pleased with that gain, offerings and fame, and his intention is fulfilled. On account of it he lauds himself and disparages others thus: 'I have gain, offerings and fame but these other bhikkhus are unknown, of no account.' He becomes intoxicated with that gain, offerings and fame, grows negligent, falls into negligence, and being negligent, he lives in suffering. "

​"Suppose a man needing heartwood, seeking heartwood, wandering in search of heartwood, came to a great tree standing possessed of heartwood. Passing over its heartwood, its sapwood, its inner bark, and its outer bark, he would cut off its twigs and leaves and take them away thinking they were actually heartwood. Then a man with good sight, seeing him, might say: 'This good man did not know how to differentiate the heartwood, the sapwood, the inner bark, the outer bark, or the twigs and leaves. Thus, while seeking heartwood, he came to a great tree standing possessed of heartwood, and passing over its heartwood, its sapwood, its inner bark, and its outer bark, he cut off its twigs and leaves and took them away thinking they were heartwood. Whatever it was this good man had to make with heartwood, his purpose will not be served.' Similarly, bhikkhus, here some clansman goes forth out of faith...he lives in suffering. This bhikkhu is called one who has taken the twigs and leaves of the holy life and stopped short with that."

"Here, bhikkhus, some clansman goes forth out of faith from the home life into homelessness, considering: 'I am a victim of birth, ageing, and death, of sorrow, lamentation, pain, grief, and despair; I am a victim of suffering, a prey to suffering. Surely an ending of this whole mass of suffering can be known.' When he has gone forth thus, he acquires gain, offerings and fame. He is not pleased with that gain, offerings and fame, and his intention is not fulfilled. He does not, on account of it, laud himself and disparage others. He does not become intoxicated with that gain, offerings and fame; he does not grow negligent and fall into negligence. Being diligent, he achieves the attainment of virtue. He is pleased with that attainment of virtue and his intention is fulfilled. On account of it he lauds himself and disparages others thus: 'I am virtuous, of good character, but these other bhikkhus are immoral, of evil character.' He becomes intoxicated with that attainment of virtue, grows negligent, falls into negligence, and being negligent, he lives in suffering. "

​"Suppose a man needing heartwood, seeking heartwood, wandering in search of heartwood, came to a great tree standing possessed of heartwood. Passing over its heartwood, its sapwood, and its inner bark, he would cut off its outer bark and take it away thinking it was heartwood. Then a man with good sight, seeing him, might say: 'This good man did not know the heartwood...or the twigs and leaves. Thus, while needing heartwood. . .he cut off its outer bark and took it away thinking it was heartwood. Whatever it was this good man had to make with heartwood, his purpose will not be served.' So too, bhikkhus, here some clansman goes forth out of faith.. .he lives in suffering. This bhikkhu is called one who has taken the outer bark of the holy life and stopped short with that."
"Here, bhikkhus, some clansman goes forth out of faith from the home life into homelessness, considering: 'I am a victim of birth, ageing, and death, of sorrow, lamentation, pain, grief, and despair; I am a victim of suffering, a prey to suffering. Surely an ending of this whole mass of suffering can be known.' When he has gone forth thus, he acquires gain, offerings and fame. He is not pleased with that gain, offerings and fame, and his intention is not fulfilled...Being diligent, he achieves the attainment of virtue. He is pleased with that attainment of virtue, but his intention is not fulfilled. He does not laud himself and disparage others. He does not become intoxicated with that attainment of virtue; he does not grow negligent and fall into negligence. Being diligent, he achieves the attainment of concentration. He is pleased with that attainment of concentration and his intention is fulfilled. On account of it he lauds himself and disparages others thus: 'I am concentrated, my mind is unified, but these other bhikkhus are un-concentrated, with their minds astray.' He becomes intoxicated with that attainment of concentration, grows negligent, falls into negligence, and being negligent, he lives in suffering."

"Suppose a man needing heartwood, seeking heartwood, wandering in search of heartwood, came to a great tree standing possessed of heartwood. Passing over its heartwood and its sapwood, he would cut off its inner bark and take it away thinking it was heartwood. Then a man with good sight, seeing him, might say: "This good man did not know the heartwood...or the twigs and leaves. Thus, while needing heartwood...he cut off its inner bark and took it away thinking it was heartwood. Whatever it was this good man had to make with heartwood, his purpose will not be served.' So too, bhikkhus, here some clansman goes forth out of faith.. .he lives in suffering.  This bhikkhu is called one who has taken the inner bark of the holy life and stopped short with that. "

"Here, bhikkhus, some clansman goes forth out of faith from the home life into homelessness, considering: 'I am a victim of birth, ageing, and death, of sorrow, lamentation, pain, grief, and despair; I am a victim of suffering, a prey to suffering. Surely an ending of this whole mass of suffering can be known.' When he has gone forth thus, he acquires gain, offerings and fame. He is not pleased with that gain, offerings and fame, and his intention is not fulfilled...Being diligent, he achieves the attainment of virtue. He is pleased with that attainment of virtue, but his intention is not fulfilled...Being diligent, he achieves the attainment of concentration but his intention is not fulfilled. He does not, on account of it, laud himself and disparage others. He does not become intoxicated with that attainment of concentration; he does not grow negligent and fall into negligence. Being diligent, he achieves knowledge and vision. He is pleased with that knowledge and vision and his intention is fulfilled. On account of it he lauds himself and disparages others thus: 'I live knowing and seeing, but these other bhikkhus live unknowing and unseeing.' He becomes intoxicated with that knowledge and vision, grows negligent, falls into negligence, and being negligent, he lives in suffering. "

"Suppose a man needing heartwood, seeking heartwood,  came to a great tree standing possessed of heartwood. Passing over its heartwood, he would cut off its sapwood and take it away thinking it was heartwood. Then a man with good sight, seeing him, might say: 'This good man did not know the heartwood...or the twigs and leaves. Thus, while needing heartwood...he cut off its sapwood and took it away thinking it was heartwood. Whatever it was this good man had to make with heartwood, his purpose will not be served.' So too, bhikkhus, here some clansman goes forth out of faith...he lives in suffering. This bhikkhu is called one who has taken the sapwood of the holy life and stopped short with that. "

"Here, bhikkhus, some clansman goes forth out of faith from the home life into homelessness, considering: 'I am a victim of birth, ageing, and death, of sorrow, lamentation, pain, grief, and despair; I am a victim of suffering, a prey to suffering. Surely an ending of this whole mass of suffering can be known.' When he has gone forth thus, he acquires gain, offerings and fame. He is not pleased with that gain, offerings and fame, and his intention is not fulfilled...When he is diligent, he achieves the attainment of virtue. He is pleased with that attainment of virtue, but his intention is not fulfilled.. .When he is diligent, he achieves the attainment of concentration but his intention is not fulfilled...When he is diligent, he achieves knowledge and vision but his intention is not fulfilled. He does not, on account of it, laud himself and disparage others. He does not become intoxicated with that knowledge and vision; he does not grow negligent and fall into negligence. Being diligent, he attains perpetual liberation. And it is impossible for that bhikkhu to fall away from that perpetual deliverance. 
"Suppose a man needing heartwood, seeking heartwood came to a great tree standing possessed of heartwood, and cutting off only its heartwood, he would take it away knowing it was heartwood. Then a man with good sight, seeing him, might say: "This good man knew the heartwood... the twigs and leaves. Thus, while needing heartwood, seeking heartwood,  he came to a great tree standing possessed of heartwood, and cutting off only its heartwood, he took it away knowing it was heartwood. Whatever it was this good man had to make with heartwood, his purpose will be served.' So too, bhikkhus, here some clansman goes forth out of faith.. .When he is diligent, he attains perpetual liberation. And it is impossible for that bhikkhu to fall away from that perpetual deliverance. "

"So this holy life, bhikkhus, does not have gain, offerings and fame for its benefit, or the attainment of virtue for its benefit, or the attainment of concentration for its benefit, or knowledge and vision for its benefit. But it is this un-shakeable deliverance of mind that is the goal of this holy life, its heartwood, and its end."

​That is what the Blessed One said. The bhikkhus were satisfied and delighted in the Blessed One's words. 
In summary, this discourse presents a simile given by the Buddha. A man sets out searching for heartwood, but mistaking the leaves and twigs for heartwood, he carries them off thinking they are the heartwood. It is used to illustrate how a man setting out to find Awakening who settles for gains, honors and reputation instead (wrong path). Similarly the other layers of a tree are used to describe a seeker who settles for less than the heartwood: accomplishment in virtue, concentration and knowledge & wisdom. In each of these cases the man is declared to be ignorant both of the thing he has accomplished and the final goal. Finally, the heartwood is presented as being the unshakable heart's release: final awakening, liberation, nibbana. 
References: 
1. www.accesstoinsight.org
2. https://suttacentral.net/
3. The middle length discourses of the Buddha (Bhikkhu Bodhi)