The basic unit of text that AI models process. A token is typically a word or word fragment — "understanding" might be one token, while "un" + "der" + "standing" could be three. On average, one token is roughly 3/4 of a word in English. Models read, think, and charge in tokens.
Why it matters
Tokens are the currency of AI. Context windows are measured in tokens. API pricing is per token. When a provider says "1M context" they mean 1 million tokens, roughly 750K words. Understanding tokens helps you estimate costs and optimize usage.