What Is Generative AI? How LLMs Actually Work (Context, Prediction & Hallucinations)

Everyone is talking about Generative AI and Large Language Models (LLMs). But how do they actually work?

In this video, I will try to break down the fundamentals of generative AI in a simple and practical way, especially for developers who want to build AI-powered applications.

We cover:
• What is Generative AI?
• How LLMs actually work (next-token prediction explained)
• Why context is the most important thing in AI development
• What AI can and cannot do
• Why AI “hallucinates”
• Is AI really intelligent?
• What does non-deterministic mean in LLMs?
• How tools and MCPs allow AI to interact with the real world

If you’re learning about AI, LLMs, ChatGPT, agents, RAG, or building AI-powered software, this video will give you a strong foundation.

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