This segment delves into the challenges of prompt engineering, focusing on the stochastic nature of LLMs, the potential for hallucinations (generating factually incorrect information), and the diverse capabilities of different models. The speaker stresses the need to understand these limitations to effectively design prompts. This segment explains the core concept of prompt engineering, emphasizing that prompts are sequences of tokens for LLMs, and effective prompt engineering involves optimizing token usage for quality responses. The speaker highlights the importance of tools like the OpenAI tokenizer to understand how prompt design impacts token count and generation. This segment showcases a practical example of prompt engineering using Github Copilot. It demonstrates how refining a prompt, by setting a high-level goal, specifying simple tasks, and providing examples, significantly improves the quality of the generated code (in this case, an image of an ice cream cone). The speaker highlights three best practices for crafting effective prompts. This lesson introduces prompt engineering for generative AI, focusing on iterative improvement. It explains prompts as natural language inputs to LLMs, influencing AI responses. Key concepts include prompt types (content, instruction, combined), handling stochasticity and hallucinations, and optimizing for quality and relevance through examples and best practices. The lesson emphasizes that prompt engineering is iterative and more art than science.