Which basic tests of understanding do state-of-the-art LLMs fail? Perhaps there's something I don't know here, but in my experience they seem to have basic understanding, and I routinely see people claim LLMs can't do things they can in fact do.
It is an example that shows the difference between understanding and patterns. No model actually understands the most fundamental concept of length.
LLMs can seem to do almost anything for which there are sufficient patterns to train on. However, there aren't infinite patterns available to train on. So, edge cases are everywhere. Such as this one.
Yes, outside the training patterns is the point. I have no doubt if you trained LLMs on this type of pattern with millions of examples it could get the answers reliably.
The whole point is that humans do not need data training. They understand such concepts from one example.