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The video tutorial from Cohere AI explains word and sentence embeddings, essential components of large language models. These embeddings transform words and sentences into numerical representations that computers can process, as computers inherently handle numbers rather than language. This transformation isn't manually done; instead, it involves complex models like neural networks that analyze context. When words frequently co-occur, the model adjusts their numerical representations to be closer together in the embedding space. The same logic applies to sentences, resulting in meaningful numerical associations that enhance the understanding and processing of language by machines.