A LLM is fundamentally a mathematical function (albeit a very complex one, with billions of terms (a.k.a parameters or weights)). The function does one thing and one thing only: it takes a sequence of tokens as input (the context), and it emits the next token(word)[1].
This is a stateless process: it has no "memory" and the model parameters are immutable; they are not changed during the generation process.
In order to generate longer sequences of text, you call the function multiple times, each time appending the previously generated token to the input sequence. The output of the function is 100% dependent on the input.
Therefore, the only "internal state" a model has is the input sequence, which is human-readable sequence of tokens. It can't "hallucinate", it can't "lie", and it can't "tell the truth", it can only emit tokens one at a time. It can't have a hidden "intent" without emitting those tokens, it can't "believe" something different than what it emits.
[1] Actually a set of probabilities for the next token, and one is selected at random based on the "heat" generating setting, but this is irrelevant for the high-level view.