This is one of the most significant verses of the chapter. Krishna says: the knower present inside every body — the inner witness in every creature — that is Me. Not just in your body, Arjuna, but in all beings.
Picture a single flame reflected in a hundred mirrors. Each mirror shows the same light. In the same way, one conscious presence — Paramatma — dwells as the Kshetragna in every living being.
Krishna then adds a definition of knowledge itself: understanding the distinction between the field and its knower — that is what I consider true knowledge.