It means direct witness to everything. As a witness he does not get entangled. Krishna in Bhagvad gita chapter 9.18 says:
गतिर् भर्ता प्रभुः साक्षी
निवासः शरणं सुह्रत
प्रभवः प्रलयः स्थानं
निधानं बीजं अव्ययम् ll
(I am the ultimate gatiH, the master, the witness abode, refuge and the dearest friend. I am the creation and the annihilation, the basis of everything, the resting place and the eternal seed.]
When there is a subject-object relationship, there is a duality or dwaitam. Objects are in the form of words and they have a nama- rupa-karma. A ‘Table’ thought brings a form of a Table and its function. If you are not aware of a ‘Table’, then such a Table-thought will not arise in the mind. Bhagavan is also similarly objectified in the form that is recognizable by the mind. Bhagvan, when he is worshipped, is seen as an outside object with a nama-rupa-karma. ‘I am Sakshi” and you have to come to my abode. In Vedanta, the subject-object are one and the same.
If you are not there as a knower, there is nothing to be known. When the maha-pralaya happens, ‘I am there as the imperishable seed of everything. Kshetragya is the person living in the abode and kshetram is the abode of Kshetragya.
Our physical body is the deham or kshetram. The in-dweller is the knower of this field and everything and he is Kshetragya. Kshetragyanam = knowledge about the knower or who ‘I am’ and the world of objects.
In Bhagvad Gita chapter 13/3
क्षेत्रज्ञं चापि मां विद्धि सर्वक्षेत्रेषु भारत |
क्षेत्रक्षेत्रज्ञयोर्ज्ञानं यत्तज्ज्ञानं मतं मम ||
O Bharat, I am the knower of all the fields. Understand the knower of the field and I am everybody as the Kshetragya. I am present as the essence in everybody. A person who thinks he is body-mind-sense complex, is a limited person and he is a Jiva. The knower of the world of objects – Kshetragya is the favorite person. Dividing the field (kshetram ), knower of the field (Kshetragya ), vibhaga yogaH separately. In reality, the knower is neither the subject nor the object.
when the ahankara is resolved in gyanam, the doer-ship disappears because there is no offering made. There is no offeror, and there is no offeree ( to whom the offering is made). Offering, offeror, and offeree are resolved into one. S
since everything is given to us by the grace of God, who are we to offer anything to him? This is our ahankara which prompts us to say, I am offering 10 coconuts, flowers, payasam, etc. avidya causes problems. KsharaH is that which declines over a period of time, AksharaH is that which is not subject to decay/decline. That which is born is subject to decay, decline. The in-dweller is ajaH and does not decline.
In Bhagvad Gita chapter 9/4:
मया ततमिदं सर्वं जगदव्यक्तमूर्तिना |
मत्स्थानि सर्वभूतानि न चाहं तेष्ववस्थित: || 4||
I pervade the entire Jagat in my un-manifest form. I am present in every living being. All living beings reside in me, but I do not reside in them. I am unborn, and I manifest through my power of Maya. Jiva is under the spell of Maya.