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How AI Agents Really Work: The Loop, Tools, and Plumbing Behind the Magic

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AI agents operate on a continuous loop where the model observes a state, plans a step, calls a tool, reads the result, and repeats until the goal is achieved. Three core factors determine an agent's reliability: the context window, which limits how much information fits per step; tools, which are the agent's only interface with the real world; and error handling, which separates polished demos from production-ready systems. Memory plays a critical role in keeping agents coherent over long tasks by selectively feeding back only relevant information at each step. Most agent failures in real-world use stem from weaknesses in these foundational mechanics rather than the underlying model's capabilities.

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