There are two things happening here. A really small LLM mechanism which is useful for thinking about how the big ones work, and a reference to the well known phenomenon, commonly dismissively referred to as a "trick", in which humans want to believe. We work hard to account for what our conversational partner says. Language in use is a collective cultural construct. By this view the real question is how and why we humans understand an utterance in a particular way. Eliza, Parry, and the Chomsky bot at http://chomskybot.com work on this principle. Just sayin'.
Fair. The background reading is the EMCA stuff - conversation analysis cf Sacks etc at, and Ethnomethods (Garfunkel). And Vygotsky cf Kozulin. People such as Robert Moore at IBM and Lemon at Herriot-Watt work in this space but there is no critical mass in the face of LLM mania.
