Earlier quoted context omitted.
> the practical question of whether we can get LLMs to answer 'I don't know' more often (which I'd argue would solve hallucinations). To answer "I don't know" requires one to know when you know. To know when you know in turn requires understanding.
how did LLMs get this far without any concept of understanding? how much further can they go until they become “close enough”?
I don't know that that is quite the right question to ask.
Understanding exists on a spectrum. Even humans don't necessarily understand everything they say or claim (incl. what they say of LLMs!), and then there are things a particular human would simply say "I don't understand".
But when you ask a human "can you understand things?" you will get an unequivocal Yes!
Ask that same question of an LLM and what does it say? I don't think any of them currently respond with a simple or even qualified "Yes". Now, some might claim that one day an LLM will cross that threshold and say "Yes!" but we can safely leave that off to the side for a future debate if it ever happens.
General note: it is worth separating out things like "understanding", "knowledge", "intelligence", "common sense", "wisdom", "critical thinking", etc. While they might all be related in some ways and even overlap, it does not follow that if you show high performance in one that you automatically excel in each of the other. I know many people who anyone would say are highly intelligent but lack common sense, etc.