Earlier quoted context omitted.
Using a conceptual understanding of something to deduce or infer something else. An LLM doesn't know what anything is. Just what goes around the token representation of that thing.
"conceptual understanding of something" is just another way of saying "the relationship between concepts", which is exactly what transformer models use. *EDIT* To elaborate, how can you define anything in isolation of every other concept/thing? You can't. Things are only defined by their relationships to each other, which is exactly the same thing transformer models do.
"The relationship between concepts," is focusing specifically on how different ideas connect, overlap, contradict, or complement each other. It's more about the network or system of connections rather than deep comprehension of individual concepts.
Understanding relationships between concepts is part of conceptual understanding, sure. But conceptual understanding is broader - it includes both mastery of individual concepts and awareness of their relationships to other concepts.