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The video tutorial from Cohere AI discusses word and sentence embeddings, which are crucial for large language models. Language models aim to enable computers to understand and process human language, which is inherently word-based, whereas computers operate on numbers. Word embeddings convert words into numerical representations, while sentence embeddings do the same for entire sentences. This process is automated by neural networks, which analyze context and bring similar words or sentences closer in their numerical representation. Ultimately, this methodology leads to impressive outcomes in natural language understanding.