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So specifically, you are saying that LLM coding assistant currently gets confused when working on a large source file but if it had room for more context, you could get better help in writing code because it would have understanding of the entire module. Correct?

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Technically so, but not confused - it may hallucinate but that's unrelated to context window (and more due to dataset and number of parameters)

However, a longer context does mean you can give a lot more verbose instruction, maybe feed a whole code base over just a single script to give wider context over the current problem

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