A token in AI is a fundamental unit of data that AI models use to process and understand information, especially in natural language processing. Tokens can be entire words, parts of words (subwords), characters, or even punctuation marks, depending on the tokenization method. For example, a sentence is broken down into these smaller units (tokens) so the AI model can analyze and generate meaningful responses. Tokens also appear in other AI domains like images or audio, where they might represent pixels or sound snippets. Tokens are crucial because AI models work by processing these tokens step-by-step to predict and generate text or other outputs. The number of tokens affects the model's ability to maintain context and impacts the computational cost of using the AI. In short, tokens are the building blocks that AI uses to break down, understand, and generate human language and other data forms efficiently.