How Claude Code Thinks: Inside Your AI Coding Assistant

Introduction You've set up Claude Code and sent your first prompt. Now the question is: how does it actually understand what you wrote? This guide covers what happens under the hood — how Claude reads code, what tokens and context mean in practice, and why it sometimes drops details from earlier in a conversation. Understanding these mechanics will change how you prompt. How Claude Reads Code Claude doesn't execute your code. It processes text. Three stages build its understand...