While being very capable, AI is missing something required for true intelligence and I struggle to explain exactly what it is I see missing.

It's not really "creativity" because much of that always was derivative in my opinion. And LLMs are (for some definition of the word) fairly creative as far as taking known elements and re-arranging them.

I think what is missing is sort of a world model building capability. As humans we see phenomenon and classify them informally and model "what would it look like if this were the cause of that?" type scenarios. We see qualities in phenomena and realize this applies to other things even though the things may be completely different. We run informal "thought experiments" sort of. This is hard to duplicate because a lot (most?) of it occurs outside of systems of symbols like math and language with fixed rules in my opinion.

Anyway yes, lots of human thinking is statistical and LLMs have that down pretty well but they are not "smart" I have concluded and it might be a very long time, if ever, until they are. That isn't to say they aren't very capable tools which they obviously are.

So, right of the bat, you are warning us that you are going to apply the " no true Sscottman" fallacy, and that we should brace ourselves.

Yes, models posses intelligence, but it is not a true one.

Then you claim that models do not posses world-building capabilities. But this is simply not true. Even ignoring the whole subgenre of scientific papers on exactly that subject, it is not that hard to build some hypothetical scenarios, big or small, and then witness the ease with which models do navigate those worlds.

Yes. And they are criticizing a model for not having a default mode network - as if that is some impossibility rather than just an artifact of the current iteration of the specific architectures we have built so far. Why do people paint with these broad brushes over relatively specific complaints?

LLMs are likely for machine intelligence something like drosophila are to biological intelligence - relatively early on the high dimensional spectrum of possibility. Though it stikes me that in a different way they're little alike - drosophila are relatively small and efficient.

I'll restate because both objections (which apparently skim instead of read) are missing the important point. Yes LLMs can run "what ifs" scenarios and build models.

However LLMs deal entirely in symbols. 100%. Humans can "world build" aside from this and in fact are often at their best doing so.

Did the first humans to use fire and some form of a wheel even have the capability to talk about it? Think about that.