To understand why, imagine we feed an LLM two pieces of information: The father of Frédéric Chopin was Nicolas Chopin, and Nicolas Chopin was born on April 15, 1771. If we then ask it, “What is the birth date of Frédéric Chopin’s father?” the LLM would have to answer by composing, or putting together, the different facts. In effect, it would need to answer the following nested question: “What is the birth date of (Who is the father of (Frédéric Chopin)?)?” If the LLM predicts the wrong words as an answer, it’s said to have hallucinated — in this case, possibly as a result of failing to solve the compositional task.
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