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I've had the "modern AI is mind-blowing" argument quite a few times here (I see you participated in this one), and I'm not really in a good state to argue cogently right now. But you did ask nicely, so I'll offer more of my perspective.
LLMs have their problems: You can get them to say stupidly wrong things sometimes. They "hallucinate" (a term I consider inaccurate, but it's stuck). They have no sense of embodied physics. The multimodal ones can't really "see" images the way we do. Mind you, just saying "gotcha" for things we're good at and they're not cuts both ways. I can't multiply 6 digit numbers in my head. Most humans can't even spell "definately" right.
But the one thing that LLMs really excel at? They genuinely comprehend language. To mirror what you said, I "do not understand" how people can have a full conversation with a modern chatbot and still think it's just parroting digested text. (It makes me suspect that many people here, um, don't try things for themselves.) You can't fake comprehension for long; real-world conversations are too rich to shortcut with statistical tricks. If I mention "Freddie Mercury teaching a class of narwhals to sing", it doesn't reply "ERROR. CONCEPT NOT FOUND." Instead there is some pattern in its billion-dimensional space that somehow fuzzily represents and works with that new concept, just like in my brain.
That already strikes me as a rather General form of Intelligence! LLMs are so much more flexible than any kind of AI we've had before. Stockfish is great at Chess. AlphaGo is great at Go. Claude is bad at Pokemon. And yet, the vital difference is that there is some feature in Claude's brain that knows it's playing Pokemon. (Important note: I'm not suggesting Claude is conscious. It almost certainly isn't.) There's work to do to scale that up to economically useful jobs (and beating the Elite Four), but it's mainly "hone this existing tool" work, not "discover a new fundamental kind of intelligence" work.
The main reason for LLM scepticism is this impression can be extremely deceiving. I had totally missed how little mathematical understanding my classmate actually had, even in years of helping him, until he made a very specific kind of mistake once. And it goes way further than that: It seems like most humans "know in principle" how to count, even if they only have words for the low numbers. But they dont! Counting to ~7 is done with pattern recognition. Dogs can count to 3. Higher numbers are counted with the recursive method, and you dont get any closer to that by improving pattern recognition. That might get you something that can count to 100, if you give it enough compute, but thats not actually any closer to the new kind of intelligence youd want.
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