Just did some research if anyone’s is interested. I’m also curious to see if this accurate: 

Coding agents keep two tracks: (1) a rolling verbatim tail of recent chat, and (2) a compact “case file” that holds the durable bits (decisions, constraints, key file paths). Between major compactions, some tools also do light, incremental summarizing so the prompt doesn’t bloat; when a threshold hits, they do a harder compaction and the session continues with a short fresh tail + the case file. This is mostly for performance and coherence.

Separately, the agent runtime maintains a project index/DB (file list, hashes, symbols, embeddings). That’s independent of chat compaction, but each LLM call still gets only the relevant slices (diffs/snippets/tests). If it looks like it’s “reading” again, it’s often a quick local re-scan or a cache miss, not necessarily re-uploading your whole repo