ANALOGY

A bubble of air appears on the floor of a pond and then drifts slowly upward.  In Vedanta, this bubble is the Atman, and its appearance in the pond its birth into a human. 
 
The pond is the koshas or sheaths, as they are called, consisting of the body, the life force, the mind, the intellect or discriminating faculty, and the state of bliss, bliss because it is nearest to the Atman which is blissful.
 
The Atman bubble identifies with the pond for its entire assent, assuming that it is itself the pond.  Only when it reaches the surface does it see what it actually is, which is the air of the sky, Brahman.