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The video tutorial from Cohere AI discusses word and sentence embeddings, which are essential for large language models. These embeddings enable computers to understand and process language by converting words and sentences into numerical representations. Each word is associated with a list of numbers, and similarly, sentences are linked to numerical lists in a meaningful way. This process is automated through neural networks, which analyze context; words that appear together in similar contexts are grouped closer together in the numerical space. This method leads to impressive results in language understanding and processing.