Sri Adi Sankaracharya in the Atma Bodha lives within the conditioning of all his material limitations called the upadhis. An upadhi is a limiting adjunct. In Vedanta, it is the body, mind and intellect. Otherwise, anything that limits our scale of understanding of our self is an upadhi.
It has a role. The name of a degree certificate is also called upadhi in Hindi. It reveals our limitations and helps us strive to transcend it. The body is our limitation of perception. The mind is our limitation in feeling and the intellect reveals our limitation in thinking.
The three limitations have their qualities. The body is born, it grows, changes, degenerates and eventually dies. The mind contracts and expands itself chasing objects it likes and drawing away from what it does not like. The intellect constantly keeps deciding something and zeroes in on the choices we make to pursue them. These changes do not affect the self-realised being who rests in the identity that he is the witness and is not affected by the qualities of the body, mind and intellect. He is untouched by them.
This is a quality the scriptures can alone reveal and it is not something we can directly see for ourselves or learn through conjectures. The intuitive revelations of the masters called the shastras alone reveal this to us.
Such a person who knows the self is called sarvavit—the one who knows everything. When people who know little brag so much about their knowledge, just imagine the pride that one could possibly have if they know every bit of knowledge in this universe. However, this person has no such attitudes or presumptious assumtions. Rather he may put on the mask of stupidity.
There are two similies to show how he is and how he functions in the world. He is like the sky. The sky is not dried up by air, burnt by fire, made wet by water and soiled by the earth, even though the four elements exist in it. This contemplator has reached the final goal and he is not affected by any situation.
He not just exists, but moves around like air. The air moves from one place to another. It cannot be seen. It is not touched by the dust it kicks up or the storms and typhoons that happen. The rising oceans do not disturb it nor does the blazing heat of the sun scorch it. It is unconditioned and unbounded in its movement. The same is the lifestyle of a liberated being.