Acharya Prashant explains that individuality can only be understood by first understanding what it means to be a 'person.' He describes a person as a fragmented mind divided into various sectors like family, society, education, and media. Such a mind is not independent but is a slave to multiple external masters, leading to a dissipated and random life where one's energy is never focused in a single direction. This state of being a person is characterized by conditioning and a lack of personal will, where one merely reacts to external influences rather than acting from their own understanding.