AI models like Claude Code can experience a decline in output quality as their context window fills. It is recommended to start a new session once the context usage exceeds 50% to avoid this degradation, which can manifest as the model 'forgetting' earlier instructions.

Current LLMs are intelligent enough for many tasks but fail because they lack access to complete context—emails, Slack messages, past data. The next step is building products that ingest this real-world context, making it available for the model to act upon.

People struggle with AI prompts because the model lacks background on their goals and progress. The solution is 'Context Engineering': creating an environment where the AI continuously accumulates user-specific information, materials, and intent, reducing the need for constant prompt tweaking.

Karpathy identifies a key missing piece for continual learning in AI: an equivalent to sleep. Humans seem to use sleep to distill the day's experiences (their "context window") into the compressed weights of the brain. LLMs lack this distillation phase, forcing them to restart from a fixed state in every new session.

The "Omniscience" accuracy benchmark, which measures pure factual knowledge, tracks more closely with a model's total parameters than any other metric. This suggests embedded knowledge is a direct function of model size, distinct from reasoning abilities developed via training techniques.

When using AI for complex analysis like a medical case, providing a detailed, unabridged history is crucial. The host found that when he summarized his son's case history to start a new chat, the model's performance noticeably worsened because it lacked the fine-grained, day-to-day data points for accurate trend analysis.

Instead of one large context file, create a library of small, specific files (e.g., for different products or writing styles). An index file then guides the LLM to load only the relevant documents for a given task, improving accuracy, reducing noise, and allowing for 'lazy' prompting.

Even models with million-token context windows suffer from "context rot" when overloaded with information. Performance degrades as the model struggles to find the signal in the noise. Effective context engineering requires precision, packing the window with only the exact data needed.

Artificial Analysis found that a model's ability to recall facts is a strong function of its total size, even for sparse Mixture-of-Experts (MoE) models. This suggests that the vast number of "inactive" parameters in MoE architectures contribute significantly to the model's overall knowledge base, not just the active ones per token.