Sri Aurobindo translates Katha Upanishad, Second Cycle: Third Chapter, Verse 17: “The Purusha, the Spirit within, who is no larger than the finger of a man is seated for ever in the heart of creatures: one must separate Him with patience from one’s own body as one separates from a blade of grass its main fibre. Thou shalt know Him for the Bright Immortal, yea, for the Bright Immortal.”
The divine Spirit inhabits the entire universe, including each living being. Human beings are distracted by the apparently separate forms of the outer world and fail to recognize the divine presence either within themselves or in the world. This verse provides a meditation technique to aid the seeker in recognizing the divine Presence. It is not intended to be a literal statement of “size” but rather as an aid to focusing the concentration.
The seat of the aspiration is in what the scriptural texts call the “secret cave” behind the heart. They are not describing the physical heart, but the general locale where the concentrated focus of the meditation can most easily recognize the divine Spirit in man. All outer distractions are removed, the concentration focuses away from the impinging impressions of the senses, and all thought is withdrawn. The concentration and aspiration are in the heart region, and as the seeker goes ever inwards, he can experience the Presence. This is not necessarily an easy process, as the seeker must distinguish between the external being and its desires, emotions, impressions and thoughts and this inner divine Spirit, that is one with the Divine manifesting the entire universal creation. It is likened to separating the main fibre from a blade of grass.
When the seeker eventually is able to identify with and experience this Presence, the overwhelming experience is one of Light, and there is a sense of changeless existence, of Immortality.
Sri Aurobindo, The Upanishads, Katha Upanishad, pp. 213-241, and Kapali Sastry, Lights on the Upanishads, pp. 104-129