Verse 8.7.4

तौ ह प्रजापतिरुवाच य एषोऽक्षिणि पुरुषो दृश्यत एष आत्मेति होवाचैतदमृतमभयमेतद्ब्रह्मेत्यथ योऽयं भगवोऽप्सु परिख्यायते यश्चायमादर्शे कतम एष इत्येष उ एवैषु सर्वेष्वन्तेषु परिख्यायत इति होवाच ॥ ८.७.४ ॥
॥ इति सप्तमः खण्डः ॥

tau ha prajāpatiruvāca ya eṣo'kṣiṇi puruṣo dṛśyata eṣa ātmeti hovācaitadamṛtamabhayametadbrahmetyatha yo'yaṃ bhagavo'psu parikhyāyate yaścāyamādarśe katama eṣa ityeṣa u evaiṣu sarveṣvanteṣu parikhyāyata iti hovāca || 8.7.4 ||
|| iti saptamaḥ khaṇḍaḥ ||

4. Prajāpati said to those two, ‘That which is seen in the eyes is the Self.’ He also said: ‘This Self is immortal and fearless. It is Brahman.’ Then they asked: ‘Lord, we see something when we look in water and again when we look in a mirror. Which is it?’ Prajāpati replied, ‘The Self is seen in all these’.

Word-for-word explanation:

Tau, to those two; prajāpatiḥ ha uvāca, Prajāpati said; yaḥ eṣaḥ puruṣaḥ, that person which; akṣiṇi dṛśyate, is seen in the eye; eṣaḥ ātmā iti, that is the Self; ha uvāca, [then] he said; etat amṛtam, that is immortal; abhayam, [and] fearless; etat brahma iti, that is Brahman; atha, then [they asked]; bhagavaḥ, Lord; yaḥ ayam apsu parikhyāyate, that which is seen in water; yaḥ ca ayam ādarśe, and that which is in a mirror; katamaḥ eṣaḥ iti, which is it; eṣaḥ, this [Self]; u eva eṣu parikhyāyate, is that which is seen; sarveṣu anteṣu, in all these; iti ha uvāca, he said. Iti saptamaḥ khaṇḍaḥ, here ends the seventh section.

Commentary:

According to Hindu philosophy, Supreme Knowledge is not meant for people whose minds are not pure. Though Indra and Virocana had been with Prajāpati for thirty-two years and they had made some progress towards purity, their minds were not yet pure enough to receive Self-knowledge. So Prajāpati’s first instruction was neither here nor there. It didn’t help them much.

To begin with, Prajāpati said the Self is in the eyes. We all know that if We stand in front of someone, we can see our own reflection on that person’s eyes, and this is what Indra and Virocana thought Prajāpati meant. They said: ‘We see a similar reflection when we look in water or in a mirror. We see ourselves reflected there. Which of these is the Self?’ Prajāpati answered, ‘The Self is in all these.’

Here Śaṅkara raises the question: What did he mean by this? Was he misleading them? No, he was not misleading them, because it is true the Self is everywhere and in everything. But a person has to search. They could take his statement literally, but that would be a mistake. He wanted them to ask questions and use their judgement. He knew they would not understand, however. They were not yet ready for the highest Truth. He felt they had to spend more time practising brahmacarya.