Śreyas is centred on the self

After pointing out the importance of vairagram by seeing the limitation of any object which is gained through limited karma, in the next mantra, yamaraja introduces ātmā, the subject matter of śreyas, centered on the self.

tam durdarśam gūḍhamanupraviṣṭam guhāhitam gahvareṣṭham purāṇam |

adhyātmayogādhigamena devam matvā dhīro harṣaśokau jahāti ||1.2.12||

Having known the effulgent (ātmā) which is difficult to see, which enters into the deep place, which located in the cave, which remains in a narrow place with miseries, and which is ancient, by resorting to adhyātmayoga, the discriminative one gives up happiness and sorrow.

Yamaraja describes the nature of ātmā which naciketa desires to know. gūḍhamanupraviṣṭam - that which enters into the hidden place, and it will remain hidden for one who doesn’t enquire about it. It remains hidden because people always try to find something outside to add to their limitations, with the hope to be out of this limitation. But limitlessness can’t be gained in this way, because limited can’t give limitless. Thus ātmā remains hidden and can’t be found. However, for one who enquires about it, and because of the grace, he owns up the fact that limitless is the true nature of oneself. For this person, limitless ātmā is said to be entered, which is as though enter, because from having the sense of limitation, one owns up the nature of limitlessness.

Ātmā is guhāhitam - located in the cave - buddhi, because the self is available for understanding/appreciation only in the intellect. The intellect is called guhā - cave where the treasure is hidden, because consciousness ãtmā is the very basic, samanya-jñāna - general knowledge for all knowledge to happen in the mind, but it is covered by viśesa-ñjāna - specific knowledge of name and form which is manifested in the same mind itself. Just like light is the basis for all forms to manifest in sight, we are only aware of the forms and miss the light.

Ātma is gahvareṣṭham - resides in narrow space - body-mind-sense-complex which is endowed with many difficulties. This body starts from the womb of a mother and going through the process of being born, emotion up and down, sickness, and the last process of dying, all are endowed with miseries. purāṇam - which is ancient, beginningless which is implied endless - nitya. Even though ātmā is the resident of the body, but nitya-ātmā is different from anitya body. Such an ātmā is durdarśam - which is difficult to see/comprehend.

Then how to understand this kind of ātmā? adhyātmayogādhigamena - by attainment of fixing the mind on the self, withdrawing the attention of the mind from outside objects by seeing their limitation, and owning up I ātmā alone is limitless.

devam matvā - having known the effulgent one, effulgent because the nature of ātmā is self-evident consciousness, which is myself. dhīro harṣaśokau jahāti - the intelligent person gives up joy and sorrow, doesn’t depends on the experiential happiness to be happy and doesn’t get affected by any sorrowful situation.