The Vedanta Sutras, commentary by Sankaracharya (SBE34), tr. by George Thibaut  at sacred-texts.com
7. If it be said that (the passage does) not (refer to Brahman) on account of the smallness of the abode (mentioned), and on account of the denotations of that (i.e. of minuteness); we say, no; because (Brahman) has thus to be contemplated, and because the case is analogous to that of ether.
On account of the limitation of its abode, which is mentioned in the clause, 'He is my Self within the heart,' and on account of the declaration as to its minuteness contained in the direct statement, 'He is smaller than a grain of rice,' &c.; the embodied soul only, which is of the size of an awl's point, is spoken of in the passage under discussion, and not
the highest Self. This assertion made above (in the pûrvapaksha of Sûtra I, and restated in the pûrvapaksha of the present Sûtra) has to be refuted. We therefore maintain that the objection raised does not invalidate our view of the passage. It is true that a thing occupying a limited space only cannot in any way be spoken of as omnipresent; but, on the other hand, that which is omnipresent, and therefore in all places may, from a certain point of view, be said to occupy a limited space. Similarly, a prince may be called the ruler of Ayodhyâ although he is at the same time the ruler of the whole earth.--But from what point of view can the omnipresent Lord be said to occupy a limited space and to be minute?--He may, we reply, be spoken of thus, 'because he is to be contemplated thus.' The passage under discussion teaches us to contemplate the Lord as abiding within the lotus of the heart, characterised by minuteness and similar qualities--which apprehension of the Lord is rendered possible through a modification of the mind--just as Hari is contemplated in the sacred stone called Sâlagrâm. Although present everywhere, the Lord is pleased when meditated upon as dwelling in the heart. The case is, moreover, to be viewed as analogous to that of the ether. The ether, although all-pervading, is spoken of as limited and minute, if considered in its connexion with the eye of a needle; so Brahman also. But it is an understood matter that the attributes of limitation of abode and of minuteness depend, in Brahman's case, entirely on special forms of contemplation, and are not real. The latter consideration disposes also of the objection, that if Brahman has its abode in the heart, which heart-abode is a different one in each body, it would follow that it is affected by all the imperfections which attach to beings having different abodes, such as parrots shut up in different cages, viz. want of unity, being made up of parts, non-permanency, and so on.