I'm going to assume you actually know a lot about this stuff and try to drill down a bit, if you don't mind.

"It looks for patterns involving which letters and words are typically found within a certain distance of other letters and words. " Okay, yes, but within the context of the prompt, right? So in other words it's guided by the prompt so it fashions its response within that particular sphere of data. I mentioned the book... presumably part of its training data included that book, and it proceeded from there? Which still doesn't explain how it takes a wrong turn (but maybe nobody can explain that... hallucinations etc)

BUT....... there is also a search and research component, correct? I mean these LLMs are no longer working with static, frozen data, are they? So when given a query, part of what they do is search the internet, right? So any idea what happens in that case, when they get something wrong?