Neither Stochastic Parroting nor AGI: LLMs Solve Tasks through Context-Directed Extrapolation from Training Data Priors

This position paper argues that many behaviours framed as either "stochastic parroting" or "advanced reasoning" are better explained as context-directed extrapolation from training-data priors, and that ML and NLP research communities would benefit from evaluations that distinguish remembering and basic extrapolation from genuine application-level generalisation. Our central contribution is an actionable evaluation checklist and design patterns that make these distinctions testable in practice. Our framework posits that LLMs extrapolate from training data priors while using context to guide the model to the appropriate priors; we call this "context-directed extrapolation." Specifically, this context direction is achieved through examples in base models, leading to in-context learning, while instruction tuning allows analogous task specification via prompts rather than explicit examples. We argue that adopting this more realistic framework and controls for improving evaluation would better calibrate claims about LLM "reasoning," refocus research on how LLM performance interacts with training data and generalisability to out-of-domain tasks, and reduce miscalibration in deployment and policy decisions.