Generative AI Fundamentals

Understanding the Machine

Before mastering prompts, you must understand the engine. Generative AI is not magic—it's math, probability, and architecture.

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1. The Hierarchy of Intelligence

Artificial Intelligence
Machine Learning
Gen AI
Artificial Intelligence (AI)

The broad discipline of building machines that can perform tasks requiring human intelligence.

Machine Learning (ML)

A subset where machines learn from data to perform specific tasks without explicit programming.

Generative AI

The specific ability to create new content (text, images, code) rather than just analyzing existing data.

2. The Generative AI Stack

To build a GenAI application, you need more than just a model. You need an entire ecosystem functioning in harmony.

Layer 01

Infrastructure

GPUs, TPUs, & Cloud Servers

Layer 02

Foundation Model

GPT-4, Gemini, Claude

Layer 03

Platform & Tools

APIs, Vector DBs, Frameworks

Layer 04

Agents & Apps

The user-facing interface

3. Agents: The Next Evolution

Chatbot vs. Agent

A standard chatbot answers questions based on training data. An Agent has agency—it can use tools, browse the web, and execute complex workflows to achieve a goal.

Deterministic Agents
Follows strict pre-defined rules.
Generative Agents
Uses LLMs to adapt to new situations.
The Reasoning Loop
1
Observe the user request
2
Reason & Plan steps
3
Act (Use Tools/APIs)

4. Controlling the Chaos

LLMs are probabilistic. You can control their "creativity" using specific parameters.

Temperature

0.0 - 1.0
DETERMINISTICCREATIVE
Low (0.2) = Fact-based, Coding, Math

Hallucinations

Models do not "know" facts; they predict the next likely word. If they don't know the answer, they may confidently invent one.

Fix: Use "Grounding" or RAG (Retrieval Augmented Generation) to force the model to look at verifiable data before answering.

5. Human in the Loop (HITL)

Why humans are still essential

AI is powerful but not infallible. For high-stakes decisions, humans must remain in the workflow.

High Risk Decisions

Medical, legal, or financial advice requires human sign-off.

Content Moderation

Catching subtle nuance or harm that algorithms miss.

Edge Cases

Handling rare scenarios the model wasn't trained on.

Next: Put this into practice

Use the tactical patterns, then copy-paste workflows.