Lossy Compression
I've been describing LLMs as "just the entire internet stored with lossy compression." All LLM "deficiencies" are side effects of this.
This article describes what is lost if you tune the model to mask IP theft, or don't have a large enough model.
At a high enough quality factor, almost no data is "lost" in the lossy compression, and the similarity between "AI" and outright theft becomes visible. Introducing randomness to Gen AI is not a feature, but rather a hard requirement if they want to continue pretending it's not just massive theft of IP while making the models larger.
Hallucination, of course, is the only thing AI does, but also an inevitable side effect of the compression algorithm. AI can interpolate between the stored (stolen) data to generate intermediate or extrapolated responses, which is useful (in an artistic context) or harmful (if you're looking for medical information).
It's just crappy data compression.