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The video from Cohere AI discusses word and sentence embeddings, which are essential for large language models. Language models aim to help computers understand and process language, which is composed of words, while computers operate using numbers. Word embeddings convert words into numerical representations, and sentence embeddings accomplish the same for sentences. This process is not performed manually by humans but rather through complex neural networks that analyze context. Words that appear together in similar contexts are positioned closer together in the embedding space. The outcome of this method produces impressive results in language comprehension.