Shri Krishna is illustrating the transformative power of knowledge over actions. He uses the metaphor of fire burning wood into ashes to convey how the fire of knowledge can annihilate the karmic reactions of all deeds. Just as a fire reduces wood to ashes, leaving no trace of its original form, similarly, the fire of knowledge consumes all actions, leaving no residue of their effects.

The analogy is profound and symbolic. Fire is a universal symbol of transformation and purification. When wood is burned, it undergoes a fundamental change in its structure and composition, transforming into ashes. Similarly, when one attains true knowledge, it fundamentally alters their perception and understanding of the world, leading to the dissolution of the ego and attachment to material actions and their outcomes.

Lord Krishna emphasizes that true knowledge, or spiritual wisdom, has the power to purify the soul and liberate it from the cycle of karma. Just as fire purifies everything it touches, the fire of knowledge purges the soul of its accumulated karmic impressions, freeing it from the bondage of worldly desires and attachments.

This verse encourages seekers to cultivate the fire of knowledge through spiritual practices such as meditation, self-inquiry, and study of scriptures. By nurturing the flame of wisdom within, individuals can transcend the limitations of their conditioned mind and attain liberation from the cycle of birth and death. Overall, this verse underscores the transformative potential of true knowledge in liberating individuals from the shackles of material existence and leading them towards spiritual enlightenment and ultimate liberation (moksha).