This verse completely rejects the theory of brahma satyaṁ jagan mithyā, which states that spirit, or Brahman, is real, whereas the manifested material world, with its great variety of things, is false. Nothing is false. One thing may be permanent and another temporary, but both the permanent and the temporary are facts. For example, if someone becomes angry for a certain period, no one can say that his anger is false. It is simply temporary. Everything we experience in our daily lives is of this same character; it is temporary but real.
The different kinds of living entities coming from various sources are very clearly described in this verse. Some are born from a womb and some (like certain insects) from human perspiration. Others hatch from eggs, and still others sprout from the earth. A living entity takes birth under different circumstances according to his past activities (karma). Although the body of the living entity is material, it is never false. No one will accept the argument that since a person's material body is false, murder has no repercussions. Our temporary bodies are given to us according to our karma, and we must remain in our given bodies to enjoy the pains and pleasures of life. Our bodies cannot be called false; they are only temporary. In other words, the energy of the Supreme Lord is as permanent as the Lord Himself, although His energy is sometimes manifest and sometimes not. As summarized in the Vedas, sarvaṁ khalv idaṁ brahma: "Everything is Brahman."