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The video tutorial from Cohere AI explains the concepts of word and sentence embeddings, which are fundamental for large language models. These embeddings enable computers to understand and process language by converting words and sentences into numerical representations. Instead of humans manually assigning numbers to words, this conversion is performed by a computer, usually utilizing a neural network. The model analyzes context, moving similar words and sentences closer together in the numerical space based on their co-occurrence in similar contexts. This approach leads to effective and meaningful representations that enhance language processing capabilities.