The model partially solves the problem but fails to learn the correct loop length:
> An investigation of model errors (Section 5) reveals that, whereas large language models commonly “hallucinate” random solutions, our models fail in principled ways. In almost all cases, the models perform the correct calculations for the long Collatz step, but use the wrong loop lengths, by setting them to the longest loop lengths they have learned so far.
The article is saying the model struggles to learn a particular integer function. https://en.wikipedia.org/wiki/Collatz_conjecture
That's a bit of an uncharitable summary. In bases 8, 12, 16, 24 and 32 their model achieved 99.7% accuracy. They would never expect it to achieve 100% accuracy. It would be like if you trained a model to predict whether or not a given number is prime. A model that was 100% accurate would defy mathematical knowledge but a model that was 99.7% would certainly be impressive.
In this case, they prove that the model works by categorising inputs into a number of binary classes which just happen to be very good predictors for this otherwise random seeming sequence. I don't know whether or not some of these binary classes are new to mathematics but either way, their technique does show that transformer models can be helpful in uncovering mathematical patterns even in functions that are not continuous.