AI Glossary

Key terms and concepts for self-hosted AI agents and small business automation.

AI Agent

An autonomous software system that can perceive its environment, make decisions, and take actions to achieve specific goals without constant human intervention.

Self-Hosted

Running software on your own infrastructure (VPS, dedicated server, or local hardware) rather than relying on third-party cloud services.

VPS (Virtual Private Server)

A virtualized server that provides dedicated resources within a shared physical machine. Common providers: Hetzner, Contabo, DigitalOcean.

LLM (Large Language Model)

A neural network trained on vast text data to understand and generate human-like language. Examples: GPT-4, Claude, Llama, Mistral.

Token

The basic unit of text processing in LLMs. Roughly 4 characters or 0.75 words in English. Pricing is often per 1K or 1M tokens.

Docker

A platform for containerizing applications. Provides isolation, reproducibility, and easy deployment for AI agents and their dependencies.

Tailscale

A secure networking tool that creates encrypted mesh VPNs between devices. Used for safe remote access to self-hosted services without exposing ports.

Prompt Engineering

The practice of crafting effective instructions to AI models to elicit desired responses. Critical for getting reliable results from agents.

RAG (Retrieval-Augmented Generation)

A technique that combines LLM generation with external knowledge retrieval to provide more accurate, up-to-date, and contextually relevant responses.

Sandboxing

Isolating an application in a restricted environment to prevent it from accessing sensitive system resources or causing unintended side effects.