I my opinion the author refers to a LLMs inability to create a inner world, a world model.

That means it does not build a mirror of a system based on its interactions.

It just outputs fragments of world models it was build one and tries to give you a string of fragments that should match to the fragment of your world model that you provided through some input method.

It can not abstract the code base fragments you share it can not extend them with details using the model of the whole project.