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The video tutorial by Cohere AI discusses word and sentence embeddings, essential components of large language models. Language models aim to enable computers to understand and process human language, which consists of words. Since computers process numbers, word embeddings convert words into numerical representations, while sentence embeddings do the same for entire sentences in a coherent manner. This conversion is not done manually; instead, it is achieved through neural networks that analyze context. Words or sentences appearing in similar contexts are represented by closer numerical values, leading to effective and meaningful embeddings. The process ultimately yields impressive results in language understanding.