On the Fundamental Limits of LLMs at Scale

Large Language Models (LLMs) have benefited enormously from scaling, yet these gains are bounded by five fundamental limitations: (1) hallucination, (2) context compression, (3) reasoning degradation, (4) retrieval fragility, and (5) multimodal misalignment. While existing surveys describe these phenomena empirically, they lack a rigorous theoretical synthesis connecting them to the foundational limits of computation, information, and learning. This work closes that gap by presenting a unified, proof-informed framework that formalizes the innate theoretical ceilings of LLM scaling. First, computability and uncomputability imply an irreducible residue of error: for any computably enumerable model family, diagonalization guarantees inputs on which some model must fail, and undecidable queries (e.g., halting-style tasks) induce infinite failure sets for all computable predictors. Second, information-theoretic and statistical constraints bound attainable accuracy even on decidable tasks, finite description length enforces compression error, and long-tail factual knowledge requires prohibitive sample complexity. Third, geometric and computational effects compress long contexts far below their nominal size due to positional under-training, encoding attenuation, and softmax crowding. We further show how likelihood-based training favors pattern completion over inference, how retrieval under token limits suffers from semantic drift and coupling noise, and how multimodal scaling inherits shallow cross-modal alignment. Across sections, we pair theorems and empirical evidence to outline where scaling helps, where it saturates, and where it cannot progress, providing both theoretical foundations and practical mitigation paths like bounded-oracle retrieval, positional curricula, and sparse or hierarchical attention.

ItDPDM: Information-Theoretic Discrete Poisson Diffusion Model

Existing methods for generative modeling of discrete data, such as symbolic music tokens, face two primary challenges: (1) they either embed discrete inputs into continuous state-spaces or (2) rely on variational losses that only approximate the true negative log-likelihood. Previous efforts have individually targeted these limitations. While information-theoretic Gaussian diffusion models alleviate the suboptimality of variational losses, they still perform modeling in continuous domains. In this work, we introduce the Information-Theoretic Discrete Poisson Diffusion Model (ItDPDM), which simultaneously addresses both limitations by directly operating in a discrete state-space via a Poisson diffusion process inspired by photon arrival processes in camera sensors. We introduce a novel Poisson Reconstruction Loss (PRL) and derive an exact relationship between PRL and the true negative log-likelihood, thereby eliminating the need for approximate evidence lower bounds. Experiments conducted on the Lakh MIDI symbolic music dataset and the CIFAR-10 image benchmark demonstrate that ItDPDM delivers significant improvements, reducing test NLL by up to 80% compared to prior baselines, while also achieving faster convergence.