An LLM is a lossy encyclopedia

A lossy encyclopaedia should be missing information and be obvious about it, not making it up without your knowledge and changing the answer every time.

When you have a lossy piece of media, such as a compressed sound or image file, you can always see the resemblance to the original and note the degradation as it happens. You never have a clear JPEG of a lamp, compress it, and get a clear image of the Milky Way, then reopen the image and get a clear image of a pile of dirt.

Furthermore, an encyclopaedia is something you can reference and learn from without a goal, it allows you to peruse information you have no concept of. Not so with LLMs, which you have to query to get an answer.

I think you are missing the point of the analogy: a lossy encyclopedia is obviously a bad idea, because encyclopedias are meant to be reliable places to look up facts.

A lossy encyclopedia which you can talk to and it can look up facts in the lossless version while having a conversation OTOH is... not a bad idea at all, and hundreds of millions of people agree if traffic numbers are to be believed.

(but it isn't and won't ever be an oracle and apparently that's a challenge for human psychology.)

Completely agree with you - LLMs with access to search tools that know how to use them (o3, GPT-5, Claude 4 are particularly good at this) mostly paper over the problems caused by a lossy set of knowledge in the model weights themselves.

But... end users need to understand this in order to use it effectively. They need to know if the LLM system they are talking to has access to a credible search engine and is good at distinguishing reliable sources from junk.

That's advanced knowledge at the moment!