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KnowledgeLayer 2Context Engineering

Context Window Management

You fed the AI your 47-page operations manual. You gave it the customer's full history. You included every relevant document you could find.

Now the AI ignores the most important details and invents answers for questions you explicitly covered.

The AI did not malfunction. You overwhelmed it. Context windows have limits, and you hit them.

What you include matters less than what you prioritize.

10 min read
intermediate
Relevant If You're
Building AI systems that reference documents or history
Running into token limits or truncated responses
Getting inconsistent answers despite providing context

LAYER 2 INTELLIGENCE - This determines what information the AI actually uses.

Where This Sits

Category 2.4: Context Engineering

2
Layer 2

Intelligence Infrastructure

Context CompressionContext Window ManagementDynamic Context AssemblyMemory ArchitecturesToken Budgeting
Explore all of Layer 2
What It Is

Deciding what information deserves space in the AI conversation

Every AI model has a context window: a fixed amount of text it can 'see' at once. GPT-4 might handle 128,000 tokens. Claude might handle 200,000. But here is the reality: more context does not mean better answers. It often means worse ones.

When you dump everything into the context window, the AI faces the same problem your team faces when someone forwards a 47-email thread and says 'thoughts?' The signal gets buried in noise. Important details compete with irrelevant ones. The most recent information often wins regardless of importance.

Context window management is the discipline of deciding what goes in, in what order, and how much space each piece gets. It is triage for information. You cannot include everything, so you must choose what matters most for this specific task.

Get it wrong and the AI confidently answers questions you did not ask while ignoring the ones you did. Get it right and a fraction of the context produces dramatically better results.

The Lego Block Principle

Context window management solves a universal problem: when you have finite capacity and unlimited input, something has to decide what gets in and what stays out. This applies anywhere you face information overload.

The core pattern:

Define relevance criteria for the task at hand. Score information by relevance. Allocate space by priority. Include highest-value content first. Stop when capacity is reached.

Where else this applies:

Meeting agendas - Limited time means prioritizing high-impact topics over nice-to-discuss items.
Executive summaries - One page forces you to include only what the reader must know to make a decision.
Onboarding documentation - New hires cannot absorb everything, so you sequence what they need first.
Dashboard design - Screen real estate is finite, so you show leading indicators over vanity metrics.
Interactive: Fill the Context Window

See what fits and what gets cut

Select documents to include in context. Watch the token budget fill up.

User Question:
“What is our vacation policy and how do I request time off?”
~50 tokens

Context Window

4,000 tokens total (500 reserved for response)
1%
used
50 tokens used3,450 remaining
Try it: Click documents to add them to context. Try selecting all, then try auto-selecting by relevance. See the difference.
How It Works

Three strategies that fit information to capacity

Relevance Filtering

Only include what relates to the current task

Before adding anything to context, ask: does this directly help answer the question? A support query about a current project does not need the customer's complete history from three years ago. Filter ruthlessly.

Eliminates noise that could distract the AI
Requires understanding what is relevant for each task type

Priority Ordering

Put the most important information first

AI models pay more attention to content at the beginning and end of context. Put critical information early. Put supplementary details later. If truncation happens, you lose the least important parts.

Ensures critical information gets processed even at limits
Requires judgment calls about what matters most

Space Budgeting

Allocate tokens to categories by importance

Assign percentages: 20% for system instructions, 40% for relevant documents, 20% for conversation history, 20% reserved for the response. This prevents any single category from crowding out others.

Creates predictable, consistent context composition
Requires monitoring and adjustment over time
Connection Explorer

"The AI has our entire operations manual but still gives wrong answers"

You uploaded your documentation. You asked a specific question. The AI ignored the relevant section and made something up. Context window management would have prioritized the right information and left out the noise.

Hover over any component to see what it does and why it's neededTap any component to see what it does and why it's needed

Chunking
Vector Storage
Embedding Model
Context Window
You Are Here
Token Budget
Context Assembly
Accurate AI Response
Outcome
React Flow
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Press enter or space to select an edge. You can then press delete to remove it or escape to cancel.
Data Infrastructure
Intelligence
Understanding
Outcome

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Upstream (Requires)

Chunking StrategiesEmbedding Model Selection

Downstream (Enables)

Token BudgetingDynamic Context Assembly
Common Mistakes

What breaks when context is managed poorly

Do not include everything 'just in case'

You added the entire knowledge base to every query because you were not sure what the AI might need. Now most queries hit the context limit. The AI truncates important information and hallucinates the rest.

Instead: Use retrieval to find the 3-5 most relevant documents. Include only those. If the AI needs more, let it ask follow-up questions.

Do not put critical information at the end

You appended the key instruction as an afterthought at the bottom. The AI never saw it because context was truncated. It did exactly what you told it not to do.

Instead: Front-load critical information. System prompts and must-follow rules go at the beginning. Supplementary context comes after.

Do not treat all context as equally important

You gave equal weight to a customer's current question and their support tickets from 2019. The AI spent half its attention on irrelevant history and missed the actual problem.

Instead: Recency and relevance matter. Score context by how directly it relates to the current task. Allocate space accordingly.

Next Steps

Now that you understand context window management

You have learned how to control what the AI sees and prioritize what matters. The natural next step is learning to allocate specific token budgets across different context sections.

Recommended Next

Token Budgeting

Allocating tokens across system prompt, examples, context, output