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This video from Cohere AI discusses word and sentence embeddings, crucial components of large language models. These embeddings allow computers to understand and process language, which inherently consists of words, by converting them into numerical representations. Word embeddings assign a set of numbers to each word, while sentence embeddings do the same for sentences, ensuring meaningful associations. This process is performed by complex models, specifically neural networks, rather than humans. The model analyzes context to bring words or sentences that appear together closer in the numerical space, ultimately leading to impressive outcomes in natural language understanding.