There is often a lot of confusion about the use of the word consciousness. While it can loosely be defined as 'awareness of one's own existence, sensations, and surroundings', when used in Advaita literature, it can have a whole different connotation. We will explore the meaning behind consciousness as used in Non-Duality literature.
In your unmanifest natural state, you are Pure Consciousness or the Absolute. In this so called state, there is no awareness of being or not being. This state is beyond description but definitely one that is intuitively known to a Jnani (Realized).
Then, there is the state of Self Consciousness or the state of Awareness of Being, or knowing that I am. It is this state of Self Consciousness which is experienced by all but ignored by almost all but a few. It is the state which is always known to everyone as the sense of Presence. No one reading this blog right now can deny their own existence at this very moment. It is simply the state of Being. Not being this or that. Just Being.
The next state is the state of Consciousness of Objects or the state of being a Jeeva (individual or ego). In this state, one thinks of oneself as being this or being that and attaches attributes to the original state of being. In this state, the primary knowledge "I am" gets further translated into the concept "I am so and so" or "I am this body" or "I am John". Simply put, one attaches a name and form to the primary concept "I am". The "I am" gets polluted with multiple and constantly changing attributes such as " I am happy", or "I am sad" or "I am rich" or "I am poor" or "I am enlightened" or "I am ignorant" and so on and so forth. What is evident is the fact that the attributes are limitless and always changing veering from one opposite to the other. A state of utter confusion and delusion.
Most seekers are stuck in the state of a Jeeva until they meet or somehow come across the teachings of a Guru, who then shows them their True Nature as being other than the body or the mind. Some will realize the state of Self Consciousness and fewer still will abide in their ultimate state of the Absolute.
While these states and classifications are meant to make it easy for the ignorant Jeeva to understand, in essence they have no such demarcations. It is all ONE and there can be none other than the One. All these states etc. are only to get the Jeeva to understand the essence of One-ness of all. All questions arise in the state of Consciousness of Objects.