This well-known phrase originated from the sage Nisargadatta Maharaj. When he was young his Guru ordered him to attend to the sense ‘I am’ and to give attention to nothing else. He embraced that instruction totally and devoted himself to meditating upon it. Upon awakening he recognized “I am that.”
This simple phrase summarizes the core of most awakening experiences, seeing all as one. In this oneness experience the individual disappears and everything is seen as contained in pure awareness which is the one thing. “I am that” actually doesn’t recognize an “I” or a “that.” They are one. So, what we refer to as “I” is exactly the same thing as all other things or “that”. There is no distinction.
This is a seminal teaching. It’s so simple that its profoundness can be missed. Meditate on that, the I am-ness, the sense that is behind the senses, the awareness that is the very core of our being. Perhaps, just perhaps, that “you are that” will reveal itself.