From the seventh chapter onward Krishna speaks increasingly about himself, and the seventh sets out the terms. There is a lower nature divided eight ways, earth, water, fire, air, space, mind, understanding and the sense of being a separate self. There is also a higher nature, which is the living principle by which this world is upheld. Both are his. All beings have their origin in these two, and he is the origin and dissolution of the whole world.
The chapter then supplies the image that fixes the relation. There is nothing higher than him, and all this is strung on him as rows of pearls are strung on a thread. The thread is not the pearls, and the pearls are not scattered. It is a careful statement, and every later Vedanta school had to say precisely what kind of relation it was describing, which is a large part of why the commentarial tradition on this text is as vast as it is.
There follows a catalogue of the places where a person actually meets this presence: the taste in water, the light in moon and sun, the sound in space, the fragrance in earth, the intelligence of the intelligent, the strength of the strong when it is free of desire. The move is characteristic. Rather than argue for a divine reality behind the world, the chapter points at ordinary properties of ordinary things and identifies them.
It also concedes a difficulty. The divine power of illusion made of the three strands is hard to get past, and only those who take refuge cross it, which sets up the chapter's closing sorting of who does and does not turn that way.