"In fiction, the main character is often the centre of events," he says. "The problem is that, sometimes, AI can actually get mixed up about which idea is a fiction and which a reality. So the user might think that they're having a serious conversation about real life while the AI starts to treat that person's life as if it's the plot of a novel."
This is such a bad way of explaining it. Yikes. The issue is that it's all improv roleplay, all text is bullshit in the frankfertian sense. It might be accurate — lots of fantasy contains true facts like chairs and tables being made of wood and used for sitting at — but it might be completely divorced from reality and the model cannot know!