The reason it's so confusing is that in this sentence, pretty much none of the words translate literally into English. But you know "var" and "yok," right? And "mısınız" and "musunuz" are the siniz form of question particles: one for var, and one for yok. Using two of them sets up an "is it this? or that?"-type question.
So if you translate the sentence into English, it's sort of like "var mısınız" is "are you [present]?" and "yok musunuz" is "are you not?" "Are you in or out?" is about the closest you can come to a sentence that captures that question, while also making sense in English.
Thanks for breaking it down for me, sainio. I get the meaning and the construction of the sentence, now. I guess my primary confusion arose from the idea that "musunuz" derived from a continuous verb, whereas it simply derives from the application of the vowel-harmony rule with the "o" in "yok", right?
This sentence doesn't translate literally. "Do you exist or not?" is technically the translation, but it is not used to mean this literally (unless maybe you're questioning the existence of your imaginary friend). So the challenge (or fun part!) is discovering the ways it is used in Turkish conversation:
"Are you in or out?" // "Are you game or not?" // "Deal or no deal?" (thanks sajjad130786 for pointing that out, I never would have thought of that!)
For example, I've heard this phrase used during a poker game, and when someone suggested a mischievous plan. :-)