Acharya Prashant explains that the Bhagavad Gita contains the entire essence of Vedanta, far surpassing the physical events of the Mahabharata. He defines a 'living being' (Jiva) as one who perceives the world as an object separate from themselves. Consciousness is described as the realm where duality arises, characterized by the relationship between a subject and an object. He clarifies that while knowledge involves this duality, true understanding or realization (Bodha) occurs when one reaches a point where duality no longer exists. The speaker emphasizes that the Jiva often struggles to accept that its existence is due to divine grace, preferring to attribute its achievements to its own ego and effort.