And that's the whole thing, I'm pretty sure it doesn't. The same way knowing how computer RAM works doesn't give you insight into how human memory works, even if the word memory is used in both cases. A bunch of llm bros think it does though.

models spontaneously creating their own internal workspace like an inner monologue or quasi subconscious

The fuck they aren't. The token predictor predicts a token. The probability of a token is reinforced by human reactions to it. When it started generating words that usually describe inner monologue, humans started freaking out, which reinforced this probability. It's literally "say I'm alive - I'm alive" meme.
It gives us a good glimpse into human psyche however. It shows how easy it is to full people by pretend language, how willing we are to ascribe agency to anything that can pretend to write words. And even that's not new, ELIZA was 60 years ago.