Here is a simple explanation of what "token" means in AI, with some visual aids.

What is a Token?

In AI, a token is a small piece of text. AI does not read sentences like humans do. It breaks everything into tokens and understands text token by token.

A token can be a full word, part of a word, a number, a symbol, or even punctuation. So tokens are not always the same as words.

The image below illustrates how an AI might break a simple sentence into tokens for processing.

Simple Analogy

Think of a sentence as a pizza. Tokens are like pizza slices. AI "eats" the pizza slice by slice, not all at once. Each slice is a small, manageable piece of the whole.

Why Tokens Matter

AI works with numbers, not text. Tokens are converted into numbers so the AI can learn, understand, and respond faster. Everything you type becomes input tokens, and everything AI replies becomes output tokens.

AI pricing and limits are often calculated using the total number of tokens (input plus output). Writing clear and short prompts saves cost.

The following image shows how token usage is tracked on a dashboard, directly impacting the cost of using an AI service.

Summary

A token is a small piece of text that AI reads and writes. AI understands text using tokens, not full sentences or words.