kṣemāya lokasya carācarasya
satām abhadrāṇi muhuḥ khalānām
bibharṣi — You accept; rūpāṇi — varieties of forms, such as Matsya, Kūrma, Varāha, Rāma and Nṛsiṁha; avabodhaḥ ātmā — in spite of having different incarnations, You remain the Supreme, full of knowledge; kṣemāya — for the benefit of everyone, and especially the devotees; lokasya — of all living entities; cara-acarasya — moving and nonmoving; sattva-upapannāni — all such incarnations are transcendental (śuddha-sattva); sukha-avahāni — full of transcendental bliss; satām — of the devotees; abhadrāṇi — all inauspiciousness or annihilation; muhuḥ — again and again; khalānām — of the nondevotees.
O Lord, You are always in full knowledge, and to bring all good fortune to all living entities, You appear in different incarnations, all of them transcendental to the material creation. When You appear in these incarnations, You are pleasing to the pious and religious devotees, but for nondevotees You are the annihilator.
This verse explains why the Supreme Personality of Godhead appears as an incarnation again and again. The incarnations of the Supreme Personality of Godhead all function differently, but their main purpose is paritrāṇāya sādhūnāṁ vināśāya ca duṣkṛtām — to protect the devotees and annihilate the miscreants. Yet even though the duṣkṛtīs, or miscreants, are annihilated, this is ultimately good for them.