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How Large Language Models Actually Work: 8 Core Concepts Every Leader Should Know

Large Language Models are often described as intelligent systems, yet the way they actually operate remains opaque to many leaders and practitioners. This article provides a clear, step by step explanation of how transformer based language models process input, build contextual meaning, and generate responses. By separating what happens during training from what happens during inference, the goal is to demystify LLMs without relying on code or mathematical detail. Understanding this workflow helps organizations set realistic expectations, communicate AI capabilities more effectively, and design better applications that align with how these models truly work.