This was a common argument against LLMs, that the space of possible next tokens is so vast that eventually a long enough sequence will necessarily decay into nonsense, or at least that compounding error will have the same effect.
Problem is, that's not what we've observed to happen as these models get better. In reality there is some metaphysical coarse-grained substrate of physics/semantics/whatever[1] which these models can apparently construct for themselves in pursuit of ~whatever~ goal they're after.
The initially stated position, and your position: "trying to hallucinate an entire world is a dead-end", is a sort of maximally-pessimistic 'the universe is maximally-irreducible' claim.
Problem is, that's not what we've observed to happen as these models get better. In reality there is some metaphysical coarse-grained substrate of physics/semantics/whatever[1] which these models can apparently construct for themselves in pursuit of ~whatever~ goal they're after.
The initially stated position, and your position: "trying to hallucinate an entire world is a dead-end", is a sort of maximally-pessimistic 'the universe is maximally-irreducible' claim.
The truth is much much more complicated.
[1] https://www.arxiv.org/abs/2512.03750