Earlier quoted context omitted.
The problem is that while you can train a model with the hyperparameter of "context size" set to 1M, there's very little 1M data to train on. Most of your model's ability to follow long context comes from the fact that it's trained on lots of (stolen) books; in fact I believe OpenAI just outright said in court that they can't do long context without training on books. Novels are usually measured in terms of words; an…
Isn't the problem more that the "needle in a haystack" eval (i said word X once, where) is really not relevant to most long context LLM use cases like code, where you need the context from all the stuff simultaneously rather than identifying a single, quite separate relevant section?
LLMs process tokens sequentially, first in a prefilling stage, where it reads your input, then in the generation stage where it outputs response tokens. The attention mechanism is what allows the LLM as it is ingesting or producing tokens to "notice" that a token it has seen previously (your instruction) is related with a token it is now seeing (the code).
Of course this mechanism has limits (correlated with model size), and if the LLM needs to take the whole input in consideration to answer the question the results wouldn't be too good.