A person who neither kills his enemies nor acquires the wealth of the entire earth cannot become a king merely by saying 'I am a king'.
Here the word 'king' is a symbol—not externally, but as a symbol of internal victory and self-realization. Just as a person does not really become a king by merely saying "I am a king", until he defeats his enemies and establishes a kingdom on earth, similarly self-realization or salvation is not achieved by merely uttering the classical sentences like 'I am the soul', 'I am Brahma', 'Aham Brahmasmi'. Until the seeker destroys the enemies present within him—ignorance, attachment, hatred, attachment, ego, lust and bondage of karma—he cannot become entitled to the kingdom of the soul.
In spiritual practice, our greatest enemies lie within us. These enemies are false ego, attachment to sense objects, desire and anger. As long as these are active within, saying 'I am a soul' does not yield any results. It is just like a person who keeps calling himself 'rich' but in reality does not have a single penny. The use of words is meaningful only when they are connected to experience.
The essence of this verse is that merely reading scriptures, using pure words or speaking in religious language is not a guarantee of self-realization. All this is futile unless there is a direct experience of the soul, the journey of self-development is not completed, and the ignorance within is not destroyed. Just as it is necessary for a king to defeat the enemy, similarly it is necessary for a self-realized person to control his mind and end duality.
This shloka of Vivekachudamani clearly warns the seekers that merely talking about knowledge is not enough; to apply knowledge in life, to experience it and to live based on it is true self-knowledge. Just as external efforts are necessary to establish control over the external world, similarly internal sadhana—Vivek, Vairaagya, Shama, Dama, Uparati, Titiksha, Shraddha and Samadhi—is essential for self-knowledge. Without self-conquest, without realization of Brahman, one cannot be free by merely saying 'I am free'.
Thus this shloka makes us aware of the necessity of steadfast sadhana on the path of self-realization, fighting with internal enemies and real realization. It tells us that salvation is not a thing of speech, rather it is an achievement of experience, sadhana and self-conquest.