Prajapathi instructs Indra on the nature of the atman. He tells Indra that the body is mortal. It perishes. But it is the abode of the atman, which is imperishable. Good and evil do not affect the atman. The reason why the atman takes a body is to experience its karma, whether good or bad. Joy and sorrow result because of the body.
Then Prajapathi goes on to talk about Vayu, clouds and thunder etc. These have no bodies. They arise from Akasa. When Vayu gives up its functions, it becomes similar to Akasa, which is its source. Likewise, when the atman exits samsara, it manifests in a form similar to Paramatman, that is with the characteristics of Paramatman. Before attaining the state of liberation, the atman was like a horse or a bull yoked to a chariot, for the atman was in a state of bondage to the body. The reason for this bondage, of course, is its karma, explained M.K. Srinivasan in a discourse. This shows that the body and the atman are different and are not the same.
While the eyes are the organs of sight, it is only the atman which knows that a person sees. Similarly, while the nose smells, it is the atman which knows that he smells. Thus the organs which enable us to do various things are mere instruments. It is the atman who is the knower. Those who meditate on this atman attain all worlds and desires, Prajapathi tells Indra. So, when one meditates upon the atman, the result is Brahmanubhava — experience of Brahman. But how does this come to be the result? The reason is that knowledge of the atman is the first step in Brahmavidya. One must understand the nature of the atman before meditating on the Supreme One. Prajapathi thus instructs Indra about the atman and about the presence of the Parabrahman in the heart as Daharakasa.