Loss is just surprise โ and surprise is counted in yes/no questions.
Same words, a fraction of the bits. Nothing was thrown away โ the model simply learned the text well enough that most of it stopped being a surprise. Train on a dense enough corpus and it stops being text you look things up in and becomes a prior the model reasons with.
Probabilities here are illustrative, but every bit figure is computed live from them: bits = logโ(1 รท p). Papers usually report this in nats (natural log instead of base 2) โ same quantity, 1 nat = 1.44 bits. Verses: King James Version, public domain. Real models predict sub-word tokens, not whole words.