Word for word:
sarva-bhuta-stham — situated in all beings; atmanam — the Supersoul; sarva — all; bhutani — entities; ca — also; atmani — in the Self; iksate — does see; yoga-yukta-atma — one who is dovetailed in Krishna consciousness; sarvatra — everywhere; sama-darsanah — seeing equally.
Translation by His Divine Grace A. C. Bhaktivedanta Swami Srila Prabhupada:
A true yogi observes Me in all beings and also sees every being in Me. Indeed, the self-realized person sees Me, the same Supreme Lord, everywhere.
Purport by His Divine Grace A. C. Bhaktivedanta Swami Srila Prabhupada:
A Krishna conscious yogi is the perfect seer because he sees Krishna, the Supreme, situated in everyone’s heart as Supersoul (Paramatma). Isvarah sarva-bhutanam hrd-dese ’rjuna tisthati. The Lord in His Paramatma feature is situated within both the heart of the dog and that of a brahmana. The perfect yogi knows that the Lord is eternally transcendental and is not materially affected by His presence in either a dog or a brahmana. That is the supreme neutrality of the Lord. The individual soul is also situated in the individual heart, but he is not present in all hearts. That is the distinction between the individual soul and the Supersoul. One who is not factually in the practice of yoga cannot see so clearly. A Krishna conscious person can see Krishna in the heart of both the believer and the nonbeliever. In the smrti this is conﬁrmed as follows: atatatvac ca matrtvac ca atma hi paramo harih. The Lord, being the source of all beings, is like the mother and the maintainer. As the mother is neutral to all different kinds of children, the supreme father (or mother) is also. Consequently the Supersoul is always in every living being.
Outwardly, also, every living being is situated in the energy of the Lord. As will be explained in the Seventh Chapter, the Lord has, primarily, two energies – the spiritual (or superior) and the material (or inferior). The living entity, although part of the superior energy, is conditioned by the inferior energy; the living entity is always in the Lord’s energy. Every living entity is situated in Him in one way or another.
The yogi sees equally because he sees that all living entities, although in different situations according to the results of fruitive work, in all circumstances remain the servants of God. While in the material energy, the living entity serves the material senses; and while in the spiritual energy, he serves the Supreme Lord directly. In either case the living entity is the servant of God. This vision of equality is perfect in a person in Krishna consciousness.