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This video tutorial by Cohere AI explains word and sentence embeddings, which are crucial for large language models. The concept revolves around enabling computers to understand and process language, which is inherently made up of words, while computers operate using numbers. Word embeddings convert words into numerical representations, and similarly, sentence embeddings do the same for sentences. This process is not manually done; instead, it relies on complex neural networks that analyze context. By determining how often words appear together in similar contexts, the model gradually brings similar words and sentences closer in numerical representation, leading to effective language processing.