Krishna explains how all of creation comes into being. The great Prakriti — the vast, inert field of nature — is His womb. He places the seed of consciousness into it, and from that union, every living being in the universe is born.
A farmer sows seeds in a field. The field provides soil, water, and nutrients. The seed carries the life force. Neither alone can produce a crop. Together, they bring forth an entire harvest. In much the same way, Prakriti provides the material substance and the Lord provides the spark of consciousness. Every creature that walks, flies, crawls, or swims traces its origin to this partnership.
A small but important clarification: "Mahad Brahma" here does not mean the Supreme Brahman. It refers to Mula Prakriti, the primal material nature that contains sattva, rajas, and tamas in their unmanifest form.