My suspicion is that you're leaving some important parts in your logic unstated. Such as belief in a magical property within humans of "understanding", which you don't define.

The ability of video models to generate novel video consistent with physical reality shows that they have extracted important invariants - physical law - out of the data.

It's probably better not to muddle the discussion with ill defined terms such as "intelligence" or "understanding".

I have my own beef with the AGI is nigh crowd, but this criticism amounts to word play.