The foolish think of Me, the Unmanifest, as having manifestation, knowing not My higher, immutable and most excellent nature.
In simple words
Krishna says: "The foolish think of Me — the formless, infinite divine — as if I were just another being who took a physical shape. They do not understand My higher nature, which is unchanging and beyond everything."
Contemporary scholarly and practical interpretations for modern seekers.
Swami Sivananda
7.24 अव्यक्तम् the unmanifested? व्यक्तिम् to manifestation? आपन्नम् come to? मन्यन्ते think? माम् Me? अबुद्धयः the foolish? परम् the highest? भावम् nature? अजानन्तः not knowing? मम My? अव्ययम् immutable? अनुत्तमम् most excellent.Commentary The ignorant take Lord Krishna as a common mortal. They think that He has taken a body like ordinary human beings from the unmanifested state on account of the force of Karma of the previous birth. They have no knowledge of His higher? imperishable and selfluminous nature as the Highest Self. They think that He has just now come into manifestation? though He is selfexistent? eternal? beginningless? endless? birthless? deathless? changeless? infinite and unmanifest.
Swami Chinmayananda
This interpretation draws on a specific tradition and may not represent the view of any single school. For authoritative guidance within a specific tradition, seek a qualified teacher.
Those who lack the discriminative wisdom to perceive the Supreme Truth manifesting through the infinite variety of names and forms cannot directly realize the imperishable, eternal nature of the atman. Due to their excessive attachment to the transient, visible world, they fail to understand that this entire universe of names and forms is strung together like pearls on a thread within the Paramatman.
The Supreme Truth—that consciousness by whose light the entire cosmos shines—is here indicated by the word "unmanifest." It is essential to understand the true meaning of this term. Whatever is perceptible to the senses, or knowable through mind and intellect—such as feelings or thoughts—is called manifest. Therefore, that which cannot be known through these three limitations is unmanifest.
Only the atman can be unmanifest, for it alone is the conscious principle through which the senses, mind, and intellect become capable of perceiving their respective objects. In other words, the atman is the witness of all these, and therefore can never be known as an object. It is unmanifest.
Those of outward-turned nature perceive only gross material forms. Through lack of discrimination, they mistake the body and capacities of a teacher or avatar for the eternal Truth itself. Undoubtedly, for concentrating the mind or for worship, a symbol or image of the object of devotion becomes necessary; but that image itself cannot be the ultimate Truth. If it were, then merely sculpting an idol from stone or reaching a teacher's presence would grant the seeker immediate realization, requiring nothing further. The purpose of image worship is to purify and concentrate the mind, through which one may practice meditation and directly experience the atman.
This verse clearly teaches us that mistaking the bottle for medicine, the body for the teacher, and the idol for God is futile. Not every white wood is sandalwood, nor is every shining object in the sky a star. An ignorant person might mistake light from a distant tower for the sun, yet no wise person would take such a notion seriously. The principle of avatar is accepted in Hindu dharma. In some measure, every person may be called an avatar. One Truth pervades everywhere, in all beings. It manifests through the limitations of mind and intellect. The purer and more steady the inner instrument, the more brightly the light of consciousness shines through it.
The person whose inner nature is supremely pure and steady, and who has gained complete mastery over inferior nature, is called a rishi, sage, or prophet. Such beings, recognizing the atman as their true nature and understanding it to be the Self of all creatures, dwell in it and live a divine life. To mistake their body, mind, and intellect for the Supreme Truth is the same error as mistaking waves for the ocean. This is why Lord Sri Krishna uses such harsh words as "unintelligent" for those lacking such discrimination.