To understand the idea of the Avatar, we must realise that according to the Bhagavad Gita, there is only “One Reality”. There are not two realities or three realities: there is only one Reality. In other words, this is a book of Vedanta, and the basic tenet of Vedanta is “There is only one Reality, one without a second”, ekamevādvitīyam, (Chhānd. Upn. 6. 2. 1). If you start with this statement, then you might say that ‘All here is God’. If the world has finite forms, if the world has forms at all, then even form is nothing but the Divine, even the finitude is nothing but the Divine. Therefore, the gulf that is being made between the infinite and the finite, and then, to say: ‘How can the infinite become finite?’ the gulf that is being made between the formless and the form, and then say: ‘How can the formless become form?’ This question is simply answered by saying that not only these forms in which God comes but all forms are divine forms; all that is finite in the world is nothing but finite form of the Divine Himself. There is no gulf between the finite and the infinite.
In every finite, the Divine can manifest Himself, just as analogically, in every mirror your entire being can be reflected and there can be thousand mirrors and in each one of them you can be manifested; and your whole being can be manifested. In every form the Divine Himself can be manifested. It is not as if Sri Krishna says that: “I come only with one special body.” The basic point is that all bodies in the world are in a sense My bodies; all forms are My forms. In fact there is nothing, which is not divine in this world. A perpetual avatar–hood basically is a fundamental principle of the Bhagavad Gita. It is in the context of ‘all as avatars of God’; everything is avatar of God, it’s a speciality, so a special formation among all formations, which are also avatars.
There is one thing, which Divine cannot do, even though He is omnipotent, and for which He has got to manifest as an Avatar. It is true that for destruction of wicked, for protection of the good, many things can be done, and God omnipotently can do, and in fact He is doing all the time. Therefore if you simply keep yourself only to those words in the verse n°7, and not read between the lines, the argument against it can be quite powerful that by omnipotence of the Divine all these purposes can be fulfilled, but there is one thing the Divine cannot do. If it is the purpose of the Divine to manifest ultimately fully in the entire world, (not only in one form), but if it is the aim of God to manifest Himself in all finite forms, fully, at present He already manifest in finite forms but veiled, imperfectly, but if it is the purpose of the Divine to manifest Himself in all the forms, then you cannot deny Him in His omnipotence the power to do so. He is omnipotent therefore He can manifest also Himself in all the forms, and if He can manifest Himself in all the forms, why can he not manifest in one form? Particularly if His purpose is to manifest Himself fully, gradually, and not all at once; you cannot deny that power of God to manifest Himself gradually, or to manifest Himself fully. If it is His purpose to manifest Himself gradually, then at one stage He will manifest Himself fully in one form, and then gradually, through that “yuge yuge”, He will go on progressively manifesting until a point will reached where the manifestation will be so complete that there will be no need of an Avatar after all because He is fully manifest.
That is why the conception of sambhavāmi yuge yuge is that the Divine manifest Himself gradually, and in every Avatar He manifest much more than what He manifested earlier. It’s a gradual manifestation of the Divine, until you reach, according to the Indian tradition the idea of “Kalki”. When you reach the manifestation of Kalki, then it is the last Avatar. Why is it last? Because with His coming the full manifestation of the Divine becomes complete, and once that is done, the path is opened up as how everyone in the world can be fully manifested as the Divine. He takes special births in one special form so that He becomes fully manifest in one form, and once that is done, the passage is opened up, and then all can follow that path.