They dont. They have input that runs through a invisible stochastic canyon. As long as there is previous experience the stochastic canyon never ends. If there is none or isignificant one, or it runs out of tokkens, it hallucinates and the illusion falls apart. There is no reasoning, just the invisible grand canyon of all of human experience and knowledge. PS: try to get it to retell you a clichee movie or book and you can see life near the end, how the delta of all the same movies opens up into wildly different endings.
To advance further it would need the ability to abstract away the general situation shape and pattern recognize similar situations.
To advance further it would need the ability to abstract away the general situation shape and pattern recognize similar situations.