This is one of the most celebrated shlokas in the Gita. After many, many lifetimes of seeking, when knowledge finally ripens, a person arrives at one realization: Vasudeva is everything. There is nothing that is not Krishna. That person surrenders completely.
'Vasudevah sarvam' — three words that contain the essence of the entire chapter. When this understanding dawns — that in every form, every moment, every place, it is all the one divine — the journey is complete. The search ends not in an answer but in a seeing that transforms everything.
And such a mahatma, Krishna says, is very rare. This echoes 7.3, where He spoke of how few even attempt the path. Here, the seeker has arrived. The journey of many lifetimes has borne its fruit.