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The video tutorial from Cohere AI discusses word and sentence embeddings, which are essential components of large language models. These embeddings convert words and sentences into numerical representations, allowing computers to process language. Word embeddings link each word to a list of numbers, while sentence embeddings do the same for sentences in a meaningful way. This process is automated by a neural network, not manually by humans. The model analyzes context, bringing words that appear together closer in numerical space. Ultimately, this method yields impressive results in language understanding and processing.