I don't see LLMs being close to "real" AI at all and Sam Altman also has said he does not see LLMs ever leading to AGI but also says he could be wrong.
As to why an LLM is not AI? People are wrongfully "afraid" that an LLM is somehow make "bad" information too easily available to people. Like how to rob a bank or make a bomb. The confusion is in thinking that an LLM can output something that it had not seen in training and supposedly all the training data is available elsewhere. Now, "data leaking" is a serious issue with LLMs but that has nothing to do with "AI".
An LLM is a good auto-complete, which is a good spell checker, which is a good search algorithm. I don't see how we ever get from context search and retrieval to "AI".