Indeed, you can imagine this as some sort of advanced physics-based interpolation of various measurements (land stations, satellite data, ...) to fill in every cell in a latitude-longitude grid. This is not only used for ERA5 (training data for the models), but also to determine the initial conditions for every grid cell which are used to roll out the forecast. So AI weather models depend greatly on the NWP/physics used in for reanalysis and initial conditions. That being said, there is also research being conducted in training models straight from the raw data (weather stations, satellite, ...), thus bypassing the "interpolation" step.