A fetus in its mother's womb, near birth, is a complete, growing, living being, with a completely formed body.
It truth, however, it has no independent existence at all: it is nourished by the food the mother eats, and wherever the mother goes, there the unborn baby is automatically carried.
From the moment the baby is born, it begins to freely move its limbs, sound its voice, and generally begins its own development, in an entirely new manner, both physically and spiritually.
So it was also with the Jews in Egypt before the redemption:
They were a "nation" in many respects, even being "distinguished" and distinct from the Egyptians in terms of language, dress, etc., even with a territory of their own, in the Land of Goshen.
At the same time, however, they were enslaved and "swallowed up" by the Egyptians, so that they seemed to be engulfed "within the Egyptian nation" also in essential aspects, very much like the Egyptians themselves.
Then came the time when Hashem "took unto Himself a nation from within [the entrails of] another nation" - drawing the Jews to Himself (also) as a nation, from a state of the most abject enslavement to the height of freedom, to be come Hashem's nation, with the status of "a Kingdom of Kohanim and a Holy Nation" in their everyday life.