The joke.
So the compiler doesn't actually need to figure out if the loop is infinite or not.
Technically, it doesn't, but it requires programs to make forward progress, which is defined as either terminating, calling I/O functions, accessing a volatile variable or performing an atomic or synchronization operation. Infinite loops that'll eventually do one of these are perfectly valid C++ and don't have to terminate.
But also a layer deeper, collatz() takes a uint128 as input and the Collatz conjecture has already been proven to be true for all numbers that would fit into a uint128. So LLVM arrives to the correct answer (`return true`) because of the wrong reason, mathematically speaking.