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The video tutorial from Cohere AI explains word and sentence embeddings, which are crucial for large language models. Essentially, these embeddings convert words and sentences into numerical representations that computers can process. Since language is composed of words and computers operate on numbers, word embeddings associate each word with a list of numbers, while sentence embeddings do the same for sentences. This process is automated by a neural network, which analyzes context to bring related words and sentences closer together in numerical space. The result is an effective method for computers to understand and process human language.