You are the salt of the Earth; but if salt has lost its taste, how shall its salt be restored? It is no longer good for anything but to be thrown out and trodden under foot.
You are the light of the world. A city set on a hill cannot be hid.
Nor do men light a lamp and put it under a bushel, but on a stand; and thus it gives light to all in the house.
Again, Jesus is addressing Israel, 'the people that wrestles with God', explaining what it means to be 'Israel' and live in a realm under God's jurisdiction. [This would likewise apply to any group who hopes to take that role and serve that function, various Christian denominations for example.]
Salt wasn't just a spice in his society; it came in little cakes that were essential for baking bread in dung-fuelled ovens, in a place where 'firewood' would have been a luxury. They worked as a catalyst to make the flame burn clean and not pollute the bread. They did in fact lose their salt over time, and what was left wouldn't make good seasoning either.
A people like Israel [or like the Quakers?] isn't set aside just to taste good to ourselves; there's a function we're meant to serve.
That city on the hill was Jerusalem. The Pharisees, who since then came to follow Hillel's humane and enlightened interpretations of Israelite law, were at the time dominated by their narrow and legalistic nationalist faction; there had been a theological discussion with clubs and spears in which many of Hillel's school had been massacred and his school purged from the leadership.
( http://en.wikipedia.org/wiki/Hillel_and_Shammai ) Many of Jesus' subsequent disputes against 'the Pharisees' were with that group, and this passage points to a significant divergence: he believes that Israel is to be 'a light to the nations', and not by merely being pious among themselves.
So far as Israel, and with it the rest of humanity, are becoming ready to live under God's jurisdiction, this can't really be done in hiding. No in-group can keep the Kingdom for themselves; it stretches out to include everyone, whether or not they think they belong.