The "real processing" happens through the various transformer layers (and token-wise nonlinear networks), where it seems as if progressively richer meanings are added to each token. That rich feature set then decodes to the next predicted token, but that decoding step is throwing away a lot of information contained in the latent space.
If language models (per Anthropic's work) can have a direction in latent space correspond to the concept of the Golden Gate Bridge, then I think it's reasonable (albeit far from certain) to say that LLMs are performing some kind of symbolic-ish reasoning.