dvav imau purushau loke
ksharas cakshara eva ca
ksharah sarvani bhutani
kuta-stho ’kshara ucyate
There are two classes of beings, the fallible and the infallible. In the material world every living entity is fallible, and in the spiritual world every living entity is called infallible.
Commentary by Srila Prabhupada
As already explained, the Lord in His incarnation as Vyasadeva compiled the Vedanta-sutra. Here the Lord is giving, in summary, the contents of the Vedanta-sutra. He says that the living entities, who are innumerable, can be divided into two classes—the fallible and the infallible. The living entities are eternally separated parts and parcels of the Supreme Personality of Godhead. When they are in contact with the material world they are called jiva-bhuta, and the Sanskrit words given here, ksharah sarvani bhutani, mean that they are fallible. Those who are in oneness with the Supreme Personality of Godhead, however, are called infallible. Oneness does not mean that they have no individuality, but that there is no disunity. They are all agreeable to the purpose of the creation. Of course, in the spiritual world there is no such thing as creation, but since the Supreme Personality of Godhead, as stated in the Vedanta-sutra, is the source of all emanations, that conception is explained.
According to the statement of the Supreme Personality of Godhead, Lord Krishna, there are two classes of living entities. The Vedas give evidence of this, so there is no doubt about it. The living entities who are struggling in this world with the mind and five senses have their material bodies, which are changing. As long as a living entity is conditioned, his body changes due to contact with matter; matter is changing, so the living entity appears to be changing. But in the spiritual world the body is not made of matter; therefore there is no change. In the material world the living entity undergoes six changes—birth, growth, duration, reproduction, then dwindling and vanishing. These are the changes of the material body. But in the spiritual world the body does not change; there is no old age, there is no birth, there is no death. There all exists in oneness. Ksharah sarvani bhutani: any living entity who has come in contact with matter, beginning from the first created being, Brahma, down to a small ant, is changing its body; therefore they are all fallible. In the spiritual world, however, they are always liberated in oneness.
Commentary by Sri Visvanatha Cakravarti Thakur
Because I am the knower of the Vedas, I will speak in brief the essential meaning of all the Vedas in three verses. Please listen.
In the material universe made of fourteen worlds (loke), there are these two conscious beings (imau dvau purusau). He then describes who they are in brief. One is the jiva, called ksara, because he is in a deviated (ksar means to fall) condition from his svarupa or true nature. The other is brahman, called aksara, which does not deviate from its svarupa. The sruti says:
etad vai tad aksaram gargi brahmana abhivadanti
The knowers of brahman know this as aksara, O Gargi. Brhad Aranyaka Upanisad 3.8.3
The smrti says:
aksaram brahma paramam
The aksara is the supreme brahman. BG 8.3
From these quotations, it is seen that the word aksara means brahman.
Now the Lord makes clear the meaning of these two words. All the living entities are one aggregate jiva (sarvani ksarah). The collective jiva, fallen from his svarupa by beginningless ignorance and subject to karma, becomes the variety of living entities up to the moving entities like Lord Brahma. The singular number of ksarah is used to express a class. The second consciousness, aksara, is situated for all of time with is one svarupa, which does not fall.
Amara Kosa says “That is kuta sthah which is situated over all time with one form.”