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The video tutorial from Cohere AI explains word and sentence embeddings, which are essential components of large language models. These embeddings help convert words and sentences into numerical representations, enabling computers to process language. While language is composed of words, computers understand numbers, so embeddings associate each word and sentence with a list of numbers meaningfully. This process is performed by neural networks, which analyze the context in which words or sentences appear, bringing similar contexts closer together. Ultimately, this approach leads to impressive results in language understanding.