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This video from Cohere AI discusses word and sentence embeddings, which are essential for large language models. These embeddings enable computers to process language by converting words and sentences into numerical formats. Each word is associated with a list of numbers, and similarly, sentences are represented in a numerical way that maintains contextual meaning. This process is automated and not conducted by humans; instead, it utilizes a neural network that learns from the context in which words appear together. As a result, words that appear in similar contexts become more closely associated, leading to significant and impressive outcomes in language understanding.