Acharya Prashant explains the concept of Yagya as an act that diminishes the ego rather than enhancing it. He defines Yagya as a sacrifice where one offers themselves as the oblation, driven by a higher inspiration rather than personal gain. He clarifies that ordinary actions usually add layers to the self because they are performed with a sense of doership, whereas Yagya involves burning away this doership. He emphasizes that any action performed under the command of something greater than oneself, even if it results in personal loss, constitutes Yagya.