What Gautam Buddha said about "self", in Chapter Three of the Mahayana Mahaparinirvana Sutra? From this site, I found the following saying of Buddha:


  "You, monks, should not thus cultivate the  notion (samjna) of impermanence, suffering and non-Self, the notion of impurity and so forth, deeming them to be the true meaning [of the Dharma], as those people [searching in a pool for a radiant gem but foolishly grabbing hold of useless pebbles, mistaken for priceless treasure] did, each thinking that bits of brick, stones, grass and gravel were the jewel. You should train yourselves well in efficacious means. In every situation, constantly meditate upon [bhavana] the idea [samjna] of the Self, the idea of the Eternal, Bliss, and the Pure ... Those who, desirous of attaining Reality [tattva], meditatatively cultivate these ideas, namely, the ideas of the Self [atman], the Eternal, Bliss, and the Pure, will skilfully bring forth the jewel, just like that wise person [who obtained the genuine, priceless gem, rather than worthless detritus misperceived as the real thing.]
  - The Buddha, Chapter Three, "Grief",The Mahayana Mahaparinirvana Sutra


Now, as I know this saying is exactly monistic &amp; found in some hindu philosophies like Advait Vedanta &amp; Kashmiri Shaivism. This practice in Advait Vedanta is called manana; and in KS, Shuddha Bhāvna/Vikalpa under Sāktopāye - Herein you practice not to identify yourself with something (body, mind etc) which you are not.  In other words I think it seems to teach the same as,


  It is not with the body identification that you should sit for meditation. It is the knowledge "I am" that is meditating on itself.
  
  
  Nisargadatta Maharaj
  


My question is why Gautam Buddha talked about "self" (that it is eternal, blissful, etc.)? I may not be getting context, so what's the context and explanation?
The Buddha would have spoken about self as reference point. This is using conventional language and terms to explain something. Without using conventional language as medium you cannot communicate and when using conventional languages you end up using conventional terms. It is very had to have a vocabulary in terms of ultimate realities since  only few have experienced it any terms coined will not have bearing on people who has not experienced it. Since the Dhamma is taught for people who has not experienced the ultimate realities it should be in conventional terms.

Having said that any conception that there is a self or there is not self is an extreme view and also conceptual construction.


  The second mistaken inference is that, given the thoroughness with which the Buddha teaches not-self, one should draw the inference that there is no self. This inference is treated less explicitly in this discourse, although it is touched upon briefly in terms of what the Buddha teaches here and how he teaches.


Alagaddupama Sutta - Translator's Introduction by Thanissaro Bhikkhu

Also see: Sutta references which Discuss Self and Not Self under Different Contexts