Maybe if marketing people stopped using the incredibly generic term "AI", and started actually saying what something is, it might work better. When you say "this app is powered by AI", do you mean Skynet, an LLM, or a basic machine learning system?
Literally always LLM. AI is now synonym for LLM, regardless of what it meant before. Just like crypto is now synonym for e-currency and does not mean cryptography anymore.
People are not confused about these.
AI categorisation is second nature to us software engineers, it's easy to forget that the average person probably only knows the architecture for a transformer and one or two CNNs.
https://xkcd.com/2501/