What you describe would be needed for a fully autonomous system. But for a copilot sort of situation, the LLM doesn't need to understand and know of _everything_. When I implement a feature into a codebase, my mental model doesn't include everything that has ever been done to that codebase, but a somewhat narrow window, just wide enough to solve the issue at hand (unless it's some massive codebase wide refactor or component integration, but even then it's usually broken down into smaller chunks with clear interfaces and abstractions).

Imagine you are coding in your IDE and it suggests you a feature because someone mentioned it yesterday on #app-eng channel. Needs deeper context, though. About order of events, an how authoritative a character is.