Let me try putting this a different way: The machine is picking the next best word / action / chess move to output based on its past experience of the world (i.e. it’s training data). It’s not just statistics, it’s making millions of learned connections between words, and through association they start to have meaning.
Is this not exactly what the human brain does itself? Humans just have the advantage of multiple senses and having a physical agent (a body) to interact with the world.
The problem that AI has is it’s got no basis in reality. It’s like a human talking about fantasy things like unicorns. We’ve only ever experienced them as descriptions and art created from those descriptions without any basis in reality.