Katha-2-2-7-yonimanye

Sri Shankara’s Commentary (Bhashya) translated by S. Sitarama Sastri

Into wombs, combined with semen virile. Some ignorant fools go to take a body. The meaning is that the jîvas having a body enter the womb. Others, yet inferior after death, become immoveable, such as trees and the rest; ‘according to their karma, means according to karma performed by them, i.e., by the form of karma performed by them, in this birth. Similarly also , ‘ according to their knowledge,’ i.e., according to the nature of knowledge acquired by them. The meaning is that they take a body corresponding to them; for, another sruti says ‘they are born according to their knowledge.’

Links
Various resources on the Kathopanishad
Upanishad Series – Katopanishad Commentary by Swami Chinmayananda