John 8:23
“You are from beneath.”
What He says, is of this kind: It is no wonder that you imagine such things, you who are carnal men, and have no spiritual thoughts, but I shall not do anything of the kind, for,
“I am from above; you are of the world.”
Here again He speaks of their worldly and carnal imaginations, whence it is clear that the, “I am not of this world,” does not mean that He had not taken upon Him flesh, but that He was far removed from their wickedness. For He even says, that His disciples were “not of the world”, yet they had flesh. As then Paul, when he says, “You are not in the flesh”, does not mean that they are incorporeal, so Christ when He says, that His disciples are “not of the world,” does nothing else than testify to their heavenly wisdom.
Source: Homilies on the Gospel of John (New Advent)