I think LLM context is going to be like cache levels. The first level is small but super fast (like working memory). The next level is larger but slower, and so on.
RAG is basically a bad version of attention mechanisms. RAG is used to focus your attention on relevant documents. The problem is that RAG systems are not trained to minimize loss, it is just a similarity score.
Obligatory note that I could be wrong and it's just my armchair opinion