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is a mahamantra, great Mantra.
it is a shortened and more powerful version of the mantra central to all four Vedas.
it is called a beej mantra, or a "Seed" mantra.
The smaller and more concentrated an object, the more powerful it is.
A seed contains within it all necessary power to create a mighty forest tree, and so, by comparison,
it is much more powerful than the tree.
So it is with "Om Namah Shivaya", it is the beej or seed of the longer version, and thus it is a very, very potent mantra.