niÅ›amya bhÄ«ma-gaditaá¹
draupadyÄÅ› ca catur-bhujaḥ
Älokya vadanaá¹ sakhyur
idam Äha hasann iva
niÅ›amya - just after hearing; bhÄ«ma - BhÄ«ma; gaditam - spoken by; draupadyÄḥ - of DraupadÄ«; ca - and; catuḥ-bhujaḥ - the four-handed (Personality of Godhead); Älokya - having seen; vadanam - the face; sakhyuḥ - of His friend; idam - this; Äha - said; hasan - smiling; iva - as it.
Lord ÅšrÄ« Kṛṣṇa had two arms, and why He is designated as four-armed is explained by ÅšrÄ«dhara SvÄmÄ«. Both BhÄ«ma and DraupadÄ« held opposite views about killing AÅ›vatthÄmÄ. BhÄ«ma wanted him to be immediately killed, whereas DraupadÄ« wanted to save him. We can imagine BhÄ«ma ready to kill while DraupadÄ« is obstructing him. And in order to prevent both of them, the Lord discovered another two arms. Originally, the primeval Lord ÅšrÄ« Kṛṣṇa displays only two arms, but in His NÄrÄyaṇa feature He exhibits four. In His NÄrÄyaṇa feature He resides with His devotees in the Vaikuṇá¹ha planets, while in His original ÅšrÄ« Kṛṣṇa feature He resides in the Kṛṣṇaloka planet far, far above the Vaikuṇá¹ha planets in the spiritual sky. Therefore, if ÅšrÄ« Kṛṣṇa is called catur-bhujaḥ, there is no contradiction. If need be He can display hundreds of arms, as He exhibited in His viÅ›va-rÅ«pa shown to Arjuna. Therefore, one who can display hundreds and thousands of arms can also manifest four whenever needed.
When Arjuna was perplexed about what to do with AÅ›vatthÄmÄ, Lord ÅšrÄ« Kṛṣṇa, as the very dear friend of Arjuna, voluntarily took up the matter just to make a solution. And He was smiling also.