Sri Vasishtha narrated the story of King Lavan to young Rama. This story illustrates the strength of the mind to create illusion and separation from Brahman. Everything in this world, including the body, is an illusion. The Atma passes from body to body. Lord Krishna taught that the mind accompanies the Atma to the new body. This is the point Vasishtha is making to young Rama. The mind causes the illusions.