Mandukhya

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 The Mandukya Upanishad is a short, just twelve verses, description of the material manifestation and the eventual return to unmanifest form of the Universe.

The First Section of the discourses expounds the meaning of the great mystical symbol, Om, or Praṇava, as a connotation as well as denotation of the Absolute.

1. OM! - This Imperishable Word is the whole of this phenomenal universe. Its explanation is as follows,  What has become,  what is becoming,  what will become,  - verily,  all of this is OM. And what is beyond these three states of the world of time,  - that too,  verily,  is OM.

The Second Section explains the nature of the Universal Being, Vaiśvānara, or Virāt, as delineated in the Upanishad.

The Third Section propounds the mystery of Dream and Sleep, as also the cosmic counterpart of this state, namely, Hiranyagarbha, the Divine Immanent Being.

5.  The third quarter is Prajna,  where one asleep neither desires anything nor beholds any dream: that is deep sleep.  In this field of dreamless sleep,  one becomes undivided,  an undifferentiated mass of consciousness,  consisting of bliss and sustained by bliss.  His mouth is consciousness.

The Fourth Section is an exposition of the profound significance of Sleep in the interpretation of the nature of the Spirit in man.

7.  That is known as the fourth quarter: neither inward-turned nor outward-turned consciousness,  nor the two together; not an undifferentiated mass of consciousness; neither knowing,  nor unknowing; invisible,  ineffable,  intangible,  devoid of characteristics, inconceivable,  indefinable,  its sole essence being the consciousness of its own Self; the coming to rest of all relative existence; utterly quiet; peaceful; blissful; non dual; this is the Atman,  the Self; this is to be realised.

1.  The wise speak of the unreality of all entities in dream,  verily,   on account of the entities having their location within,  owing to their being enclosed.

"The wise speak of the unreality of all entities in dream"

  All entities experienced in a dream are unreal.  This statement is uncomplicated and logical.  In fact ordinary common sense tempts one to protest that this is only obvious.
But,  Gaudapada wishes us to be aware of our process of reason for deciding the reality of our worldly experiences.
In particular Gaudapada is highlighting the fact that the error of dream entities appearing real is only obvious after leaving the delusional state of dream for the higher  (albeit delusional also)  waking state.

"on account of the entities having their location within,  owing to their being enclosed".

Gaudapada goes on to offer a practical reason why entities experienced within dreams are unreal.  This reason being that things like mountains,  cars and seas or even other persons would not fit inside the person dreaming of such entities.
But, it should be seen that the original error of perception was due to being enclosed within the dream state itself.  That is,  being "within a state",  as it were,  is being within unreality,  as it were,  (Turiya or the "fourth" represents the only reality).
The reasoning that proved the entities to be unreal due to their physical size in comparison to the dreaming person took place only after leaving that "state"

The Fifth Section is centred round the great theme, the nature of Īsvara, the Supreme God of the Universe.

The Sixth Section concerns itself with the majestic character of Reality as such, the Absolute, the Absolute, as the Transcendent Presence.

The Seventh Section is the concluding summary, devoted to an explanation of the harmony between the constituents of Om, or Pranava, and the four states of Consciousness. which forms the subiect of the Upanishad.