It's probably not by just extending the context window or making the model larger, though that will of course help, because fundamentally external state and memory/simulation are two different things (right?).
Either way it seems natural that these models will soon be used for goal-oriented imagination of a task – e.g. imagine a computer agent that needs to find a particular image on a computer, it would continuously imagine the path between what it currently sees and its desired state, and unlike this model which takes user input, it would imagine that too. In some ways, to the best of my understanding, this already happens with some robot control networks, except without pixels.