That's a mischaracterization. Latent space is simply a (multidimensionally) sorted collection, it's only a piece of the pie. A massive amount of structure is held in the unembedding layer. Generative AI models are a very specific ordering, LLMs a very specific subset of that, and they're hardly the only users of the concept.

I get what the author is going for, and they're on the right track. There is something interesting going on with embedding spaces: When used as the substrate for a neural network, you can effectively treat them as a kind of continuous form of computation. That is, given two functions, you can trivially derive a function which sits exactly between those two, and do so ad infinitum, for any arbitrary program (in theory. Obviously everything materially accessible is finite.) This is only one such manipulation. You can deform a function in an unenumerable amount of ways. Think like a bezier curve path tool in something like Krita or Photoshop, but for a function. You can keep adding points and twist it to your heart's content.

It's wrong to focus on LLMs specifically, as well. This is a much, much broader topic than you realize. Most of the interesting stuff has nothing to do with language models at all. I get a huge chunk of the industry is currently having a stroke over LLMs being able to brute-force problem solving, but if we're to talk philosophy, theory, and so on, we have to get past the surface level misuse of Machine Translation's holy grail. That's like having a conversation about the potential of computation itself, but all you talk about is web browsers, using them interchangeably with "computer".