Bhagavad Gita Verse 16, Chapter 2

naasato vidyate bhaavo naabhaavo vidyate sataha |
ubhayoropi drishtontastvanayostattvadarshibhihi || 16 ||
 
The unreal has no existence, and there is no non-existence of the real; the truth about both of these has been experienced by seers of the essence.
 
asataha : unreal
bhaavaha : existence
vidyate : situation
na : no
tu : and
sataha : real
abhaavaha : non-existence
tattva : truth
darshibhihi : seers of
anayoha : of these two
ubhayoha : both
api : also
antaha : essence
drishtontaha : experienced
 
Here we encounter one of the most profound shlokas of the Gita, with layers and layers of meaning. It begins to lead us into understanding this thing called the eternal essence, and how we can experience it. At present, we may not have the capability to go too deep into it, but we can try to get its gist.
 
The best example I heard in connection with this verse is the animal cookie example. We may have come across animal cookies. They are a brand of children's cookies shaped like tigers, elephant etc. Now, some children will only want to eat the tiger shaped cookie and not the others, whereas other children may only want to eat the elephant shaped ones and not the others. But, most adults would not care about the shape of the cookie, they will eat any shape.
 
Why is this so? The adult has the wisdom to go straight to the essence of the cookie. He or she does not care about the name or the form taken by the cookie. And this wisdom has come by maturity, by knowing that the animals were "un-real" and they did not have "existence". Only the cookie dough was "real", just like this verse indicates.
 
Another example is about the newly married wife who has just received a beautiful gold bangle from her husband. Although she cares about the shape and ornamentation of the bangle, a pawn shop owner would not not really care about those things. He only cares about the weight of the bangle.
 
The prior verse indicated that a wise person is one who stays balanced in joy and sorrow. This verse explains that the balanced person will slowly achieve wisdom and reach a state where any object or situation will begin to lose its "real-ness". Only the eternal essence will remain as the common element behind every object or situation. This vision is called "tattva-drishti" or "vision of the essence".
 
Moreover, the word "bhaava" has another meaning: finitude. So it means that the real is infinite, and the unreal is finite. Therefore, the wise person does not go on chasing material objects that have a finite existence and give only finite happiness.
 
Footnotes
1. The Jnyaneshwari has several examples to illustrate this verse, for further reference.