Although Krsna is manifested before Arjuna in His universal form, Arjuna remembers his friendly relationship with Krsna and is asking pardon and requesting Krsna to excuse him for the many informal gestures which arise out of friendship. BG 1972 purports
Bhagavad-gita As It Is
BG Chapters 7 - 12
I have in the past addressed You as "O Kṛṣṇa," "O Yādava," "O my friend," without knowing Your glories. Please forgive whatever I may have done in madness or in love. I have dishonored You many times while relaxing or while lying on the same bed or eating together, sometimes alone and sometimes in front of many friends. Please excuse me for all my offenses.
Although Kṛṣṇa is manifested before Arjuna in His universal form, Arjuna remembers his friendly relationship with Kṛṣṇa and is therefore asking pardon and requesting Him to excuse him for the many informal gestures which arise out of friendship. He is admitting that formerly he did not know that Kṛṣṇa could assume such a universal form, although He explained it as his intimate friend. Arjuna did not know how many times he may have dishonored Him by addressing Him as "O my friend, O Kṛṣṇa, O Yādava," etc., without acknowledging His opulence. But Kṛṣṇa is so kind and merciful that in spite of such opulence He played with Arjuna as a friend. Such is the transcendental loving reciprocation between the devotee and the Lord. The relationship between the living entity and Kṛṣṇa is fixed eternally; it cannot be forgotten, as we can see from the behavior of Arjuna. Although Arjuna has seen the opulence in the universal form, he could not forget his friendly relationship with Kṛṣṇa.