Krishna is the Absolute Truth, the source of all things, including personality and form. His personal form is superior to all other forms. He is completely spiritual—permanent, all-knowing, and supremely joyful—and there's no difference between Krishna and his form.
He appears in this world as the Deity—an apparently material form—because our materially covered senses can only perceive matter. We can't see spirit, but we can see and serve Krishna in His Deity form. The philosophy and practices of Deity worship are elaborately described in the Vedic writings.