How does the AI understand what's going on

The standard approach in AI is to take a set of positive examples and a set of negative examples. We seek for a function that says "YES" for the positive examples given, and "NO" for the negative examples given. Using the function found, we begin to predict the right answer for examples which we do not know whether are positive or negative. In essence, the standard approach in AI represents an approximation. What is sought for is an approximation function. It is usually sought for in a given set of functions.