I think "artificial" is actually a pretty good term to describe the output of the models. That output does appear to resemble at least some definition of the word "intelligence" - there is some ability there to do cognition over information that's been provided to them in-context.
What is it to understand, then? If they can work in complex domains and produce coherent output, it would seem to necessitate at least some definition of "understanding" of the corpus, even if that understanding is unlike how a human's brain would understand it.
What else should we call them then? They model language and information in ways that allow them to manipulate it on the fly. They do so 'unnaturally' from a human's point of reference.
I legitimately can't come up with a better term than 'artifical intelligence' -- not to be confused with artificial consciousness, which I don't think exists (yet).