> So the question is, how intelligent are LLMs when you reduce their training data and training? Since they rapidly devolve into nonsense, the answer must be that they have no internal intelligence

This would be the equivalent of removing all senses of a human from birth and expecting them to somehow learn things. They will not. Therefore humans are not intelligent?

> LLMs dont do that; they just lack understanding.

You have no idea what they are doing. Since they are smaller than the dataset, they must have learned an internal algorithm. This algorithm is drawing patterns from somewhere - those are its internal, incorrect assumptions. It does not operate in the same way that a human does, but it seems ridiculous to say that it lacks intelligence because of that.

It sounds like you've reached a conclusion, that LLMs cannot be intelligent because they have said really weird things before, and are trying to justify it in reverse. Sure, it may not have grasped that particular thing. But are you suggesting that you've never met a human that is feigning understanding in a particular topic say some really weird things akin to an LLM? I'm an educator, and I have heard the strangest things that I just cannot comprehend no matter how much I dig. It really feels like shifting goalposts. We need to do better than that.