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This video by Cohere AI explains word and sentence embeddings, which are fundamental to large language models. These embeddings enable computers to process language by converting words into numerical representations. Each word is associated with a list of numbers, and sentence embeddings do the same for sentences, ensuring the representation is meaningful. This process is not manually performed by humans; instead, it is conducted by complex models, typically neural networks. The model analyzes context, bringing words that frequently appear together closer in their numerical representation. This approach results in effective language understanding and processing, showcasing impressive outcomes.