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The video tutorial from Cohere AI explains word and sentence embeddings, fundamental components of large language models. These embeddings allow computers to process language by converting words and sentences into numerical representations. This process is not manually done by humans; instead, it is performed by a neural network model that analyzes the context in which words appear together. By understanding this context, the model positions related words and sentences closer together within the numerical space. This technique enables effective language processing, yielding impressive results in natural language understanding.