Advaita recognises Brahman alone as true and eternal — that which exists at all times and without change. Scriptures explain that His Maya is the cause of the universe and reveals it while Brahman remains hidden. A Jnani is one who has crossed this Maya, able to discriminate between the real and the unreal.
In Panchadasi, Vidyaranya explains how a Jivanmukta, aware of the oneness of the Brahma Swaroopa, deals with this mutable world in which he continues to live.
He is aware of the duality caused by Maya — that Ishwara is the sole creator of the objects in the world, but that the Jiva recreates these objects by his faculty of understanding. The awareness of this differentiation of duality is crucial to maintain equanimity, Sri K. Srinivasan pointed out in a lecture.
The entire universe is Ishwara srishti. But a Jiva becomes a secondary creator when he responds to the objects as capable of experience and enjoyment. Jiva srishti is thus tempered by likes and dislikes. A gem is a creation of Ishwara and it remains so for ever. But its appeal to human beings — as being precious, exotic and unique — is the creation of Jiva. The Jiva creates the feelings of happiness, disappointment or indifference with regard to the gem but the nature of the gem as created by Ishwara remains the same.
A Jnani realises this difference clearly; he knows that the external objects are Ishwara creations but that they can cause like, dislike, anger, or desire due to the individual affiliation to them. He trains his mind to remain undisturbed by their presence.
The image of the tree in water that appears inverted might cause fear or disturbance as an abnormal phenomenon to one who does not recognise the image as a reflection. Once this truth is known, the image seen in the water no longer disturbs. The realised soul is not exempt from the hardships of the world but learns to cope with them, treating the worldly experiences as temporary.
He understands that they are to be undergone as a result of past karma. He has the mental attitude and strength to be outside the world, though very much in it.