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The video from Cohere AI discusses word and sentence embeddings, which are fundamental to large language models. These embeddings enable computers to understand and process language by converting words and sentences into numerical representations. Each word and sentence is associated with a list of numbers through automated processes, typically using complex models like neural networks. These models analyze the context in which words and sentences appear, bringing similar ones closer together in the numerical space. This method allows for advanced language comprehension and produces impressive outcomes in language processing.