Augustine works through some textual difficulties concerning Jacob's emigration to Egypt and the number of descendants Scripture attributes to him.
The promises that Jacob makes to his children are all, again, fulfilled in Christ. (And again, Augustine has to reach a bit with his allegorical method, yet I don't know that I'd disagree with any of his specific conclusions.)
Just as with Jacob and Esau, so with Joseph's children we see the blessing being conflated, and the one the world would think would be blessed not being blessed (well, not exactly), and the one the world would think would receive the lesser receives the greater blessing. In the same way, the City of God appears to be of lesser value than the city of man--where, after all, are our cities and castles and empires? Yet in reality, the City of God is that which receives the blessing of the first born.