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This video from Cohere AI discusses word and sentence embeddings, which are essential for large language models. These embeddings enable computers to understand and process language by converting words into numerical representations. Each word is linked to a list of numbers, and similarly, sentences are associated with numbers in a meaningful way. This process is automated through complex models like neural networks, which analyze the context in which words and sentences appear. By analyzing context, the model positions related words and sentences closer together in the numerical space, leading to impressive outcomes in language understanding.