The term "AI" generally refers to a subset of artificial intelligence called Generative AI. All of the popular AI models out today that you may have heard about are a type of Generative AI. There is no true Artificial General Intelligence yet, which would be machines that can fully think for themselves. Technology is not yet at that stage. This can be contrasted to Simple AI, which includes simple input/output structure like Alexa or Siri answering an easy question but becoming confused for more complex ones. The ranking of AI based on intelligence is: Simple AI > Generative AI > Artificial General Intelligence.
Types of Generative AI:
Generative AI. . .
This means that generative AI essentially predicts the next word or pixel that should come next. Everything it does is a probability-based guess, which means it will not always be correct.
In the shortest terms, generative AI is a highly sophisticated autocomplete feature.
Read a more in-depth explanation of how AI works at One Useful Thing (https://www.oneusefulthing.org/p/thinking-like-an-ai).