I know that humans are doing more than interpolating, because at the rate we read and for the typical lifespan we have, we simply cannot ingest enough text to perform the sorts of tasks we perform by simple interpolation.

I also know that whatever our brains are doing, it isn't backpropagation, nor is it even remotely related to it. The inventor of backpropagation, Geoff Hinton, frequently points this out. Backpropagation is egregiously nonlocal.