Tom: Why do the Upanishads constantly repeat and say the Self is located within the body, in the ‘heart’ or ‘cavern of the heart’ within the body? Why is this repeated time and time again? At the same time it is said the the Self is nothing to do with the body? And at the same time it is said the Self is All, everywhere?
Answer (also from Tom): It is because the Upanishads and vedanta scriptures again and again tell us to turn our attention away from objective phenomena and towards the Divine Within, which is nothing but Our True Self, the I Am, the Subject.
ie. It is only to help us turn within that the scriptures say ‘it is in the heart, located in the body, the size of a thumb’, etc, etc.
eg. from the Katha Upanishad:
2.1.12 The Puruṣa (Self), of the size of a thumb, resides in the middle of the body as the lord of the past and the future, (he who knows Him) fears no more. This verily is That.
2.3.17. The Purusha of the size of a thumb, the internal atman, is always seated in the heart of all living creatures; one should draw him out from one’s own body boldly, as stalk from grass; one should know him as pure and immortal; one should know him as pure and immortal.
See this post where Sri Ramana makes the teaching clear: Remove Nama-Rupa (Name & Form) to reveal Sat-Chit-Ananda (the Self)