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This video tutorial by Cohere AI explains the concepts of word and sentence embeddings, essential components of large language models. It highlights that language models aim to enable computers to understand and process language, which inherently consists of words, while computers operate on numbers. Word embeddings convert words into numerical representations, and sentence embeddings do the same for sentences in a meaningful way. This process is automated through a neural network that analyzes context; words occurring together in similar contexts are positioned closer together in their numerical representation. Ultimately, this method yields impressive results in language understanding.