Earlier quoted context omitted.
Indeed you can losslessly "compress" an LLM's spew into just the prompt (plus any other inputs like values of random variables). But you can also compress a book's entire content into just its ISBN. It's just that books are hopefully more than just statistical mashups of existing content (some books like textbooks and encyclopaedias are kinds of mashup, though one hopes the editors have more than a statistically-base…
You can't regenerate the book from the ISBN. But you can generate the text from the prompt.
I'm not saying the value of the returned information is equivalent, of course. But being "just a pointer" into a larger store isn't, in itself, the problem to me.