This chapter (Bhagavad-Gita Ch.11) reveals Krsna as the cause of all causes. He is even the cause of the Maha-Visnu, and from Him the material universes emanate. Krsna is not an incarnation; He is the source of all incarnations. That has been completely explained in the last chapter.
Now, as far as Arjuna is concerned, he says that his illusion is over. This means that Arjuna no longer thinks of Krsna as a mere human being, as a friend of his, but as the source of everything. Arjuna is very enlightened and is glad that he has a great friend like Krsna, but now he is thinking that although he may accept Krsna as the source of everything, others may not. So in order to establish Krsna's divinity for all, he is requesting Krsna in this chapter to show His universal form.
Actually when one sees the universal form of Krsna one becomes frightened, like Arjuna, but Krsna is so kind that after showing it He converts Himself again into His original form. Arjuna agrees to what Krsna says several times. Krsna is speaking to him just for his benefit, and Arjuna acknowledges that all this is happening to him by Krsna's grace. He is now convinced that Krsna is the cause of all causes and is present in everyone's heart as the Supersoul.
Commentary by AC Bhaktivedanta Swami Maharaj