Acharya Prashant explains that knowing the true nature of the self involves understanding two aspects: that one is the soul at the core and the body through destiny. The body is a vehicle of destiny, made of earth, while the soul is the light from beyond, untouched by destiny. To know the self is to recognize both the physical situation one is in and the spiritual truth that transcends it. He emphasizes that one must fulfill their duty according to their current life situation without becoming emotionally disturbed. Agitation arises only when personal expectations and desires are not met, but the purpose of life is to perform one's duty, not to seek personal pleasure.