Two kinds of knowledge: lower (everything that can be learned — the Vedas, ritual, grammar, astronomy) and higher (the one by which the imperishable is known). The Muṇḍaka teaches that all lower knowledge leaves the knower unchanged. Higher knowledge — of Brahman — transforms the knower by dissolving the separation between knower and known.
The title relates to muṇḍa (shaved head, renunciant) — the Upaniṣad is addressed to the renunciant who has set aside lower knowledge and is ready for the highest. A student named Śaunaka approaches the sage Aṅgiras with the question: by knowing what is everything known? This question — not 'what is Brahman?' but 'by knowing what is everything known?' — frames the text's entire inquiry.
Aṅgiras responds by distinguishing aparā vidyā (lower knowledge: the four Vedas, phonetics, ritual procedure, grammar, etymology, metre, astronomy) from parā vidyā (higher knowledge: the imperishable Brahman). All of lower knowledge is about objects. Higher knowledge is about the ground of objects — and its subject is identical with its object, which is why knowing it transforms the knower rather than merely informing them.
The text also contains the famous analogy of the two birds (2.1.1) — two birds sitting on the same tree; one eats the fruits, the other simply watches. The eating bird is the individual self absorbed in experience; the watching bird is the witness-self. The recognition of oneself as the watching bird is the liberation the Muṇḍaka is pointing toward.