Rope appears as a snake. It is not transformed into an actual snake. This is the doctrine of Advaita of Sri Sankara. In the previous Sutra the simile of the ocean and the waves was stated, accepting the apparent variety of objects. But in reality, cause and effect are one even now.
Name is only a verbal modification.
The true being is only clay. A pot is only clay even now. Similarly, the world is only Brahman even now. It is wrong to say that oneness and manifoldness are both true as in the case of ocean and waves, etc. The word eva in Mrittiketyeva shows that all diversity is unreal.