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This video tutorial by Cohere AI explains word and sentence embeddings, which are essential for large language models. Language models aim to enable computers to understand and process language, which is inherently made up of words. Since computers handle numbers, word embeddings transform words into numerical representations, while sentence embeddings do the same for sentences. This process is not manually done by humans but is carried out by neural networks that analyze context; when two words appear together in similar contexts, their numerical representations are adjusted to be closer. The resulting embeddings lead to impressive outcomes in language processing.