The New Skill in AI Is Not Prompting, It's Context Engineering

Summary

Context Engineering is new term gaining traction in the AI world. The conversation is shifting from "prompt engineering" to a broader, more powerful concept: Context Engineering. Tobi Lutke describes it as "the art of providing all the context for the task to be plausibly solvable by the LLM.” and he is right. With the rise of Agents it becomes more important what information we load into the “limited working memory”. We are seeing that the main thing that determines whether an Agents succeeds or fails is the quality of the context you give it. Most agent failures are not model failures anyemore, they are context failures. What is the Context? To understand context engineering, we must first expand our definition of "context." It isn't just the single prompt you send to an LLM. Think of it as everything the model sees before it generates a response. Instructions / System Prompt: An initial set of instructions that define the behavior of the model during a conversation, can/should include examples, rules …. User Prompt: Immediate task or question from the user. State / History (short-term Memory): The current conversation, including user and model responses that have led to this moment. Long-Term Memory: Persistent knowledge base, gathered across many prior conversations, containing learned user preferences, summaries of past projects, or facts it has been told to remember for future use. Retrieved Information (RAG): External, up-to-date knowledge, relevant information from documents, databases, or APIs to answer specific questions. Available Tools: Definitions of all the functions or built-in tools it can call (e.g., check_inventory, send_email). Structured Output: Definitions on the format of the model's response, e.g. a JSON object. Why It Matters: From Cheap Demo to Magical Product The secret to building truly effective AI agents has less to do with the complexity of the code you write, and everything to do with the quality of the context you provide. Building Ag...