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This video tutorial from Cohere AI explains word and sentence embeddings, which are essential for large language models. The challenge is that while language consists of words, computers can only process numbers. Word embeddings convert words into numerical representations, associating each word with a list of numbers, while sentence embeddings do the same for sentences. This process is not manually done but is performed by a neural network that analyzes context. When two words appear together in similar contexts, the model brings their numerical representations closer together. This ultimately leads to impressive outcomes in language understanding and processing.