Though many would not agree, I think this concept of relaxation has cause many problems in aikido.
I don't think 'relaxation' as it is applied does not mean to not use strength. Yamada sensei talks about using the appropriate muscles (e.g. in extension you want to be using your triceps, but not fighting this by also using the antagonistic biceps).
Also, I think relaxation means to keep the shoulders low (and maintain low centre of gravity). Often the upper body tenses unnecessarily.
Finally, we have to be 'sensetive' to ukes movements so we can blend. To do this we can't just be forcing ahead unthinkingly.
To summarise, instead of thinking relax, think:
1. drop shoulders*
3. be aware and able to respond to a change in ukes movements
to complete the third one you have to be mentally relaxed and 'open' to the situation (i.e. aware of what uke is actually doing, not trying to force them to do something which you want them to do).
*a good exercise for developing shoulder relaxation is 'hugging the tree' or ;holding the balloon' in chi kung. This involves standing with your arms out (as if holding a big balloon) for around 10-20 mins. HOWEVER you need to relax and drop your shoulders so the ligaments take the weight and the shoulder muscles relax.