As with what constitutes intelligence in humans, AI is hard to neatly draw a box around.
In the broadest possible sense, artificial intelligence is a machine that's able to learn, make decisions, and take action—even when it encounters a situation it has never come across before.
In the narrowest possible sci-fi sense, many people intuitively feel that AI refers to robots and computers with human or super-human levels of intelligence and enough personality to act as a character and not just a plot device. In Star Trek, Data is an AI, but the computer is just a supercharged version of Microsoft Clippy. No modern AI comes close to this definition.
In simple terms, a non-AI computer program is programmed to repeat the same task in the same way every single time. Imagine a robot that's designed to make paper clips by bending a small strip of wire. It takes the few inches of wire and makes the exact same three bends every single time. As long as it keeps being given wire, it will keep bending it into paper clips. Give it a piece of dry spaghetti, however, and it will just snap it. It has no capacity to do anything except bend a strip of wire. It could be reprogrammed, but it can't adapt to a new situation by itself.
AIs, on the other hand, are able to learn and solve more complex and dynamic problems—including ones they haven't faced before. In the race to build a driverless car, no company is trying to teach a computer how to navigate every intersection on every road in the United States. Instead, they're attempting to create computer programs that are able to use a variety of different sensors to assess what's going on around them and react correctly to real-world situations, regardless of if they've ever encountered it before. We're still a long way from a truly driverless car, but it's clear that they can't be created in the same way as regular computer programs. It's just impossible for the programmers to account for every individual case, so you need to build computer systems that are able to adapt.
Of course, you can question if a driverless car would be truly intelligent. The answer is likely a big maybe, but it's certainly more intelligent than a robotic vacuum cleaner for most definitions of intelligence. The real win in AI would be to build an artificial general intelligence (AGI) or strong AI: basically, an AI with human-like intelligence, capable of learning new tasks, conversing and understanding instructions in various forms, and fulfilling all our sci-fi dreams. Again, this is something that's a long way off.
What we have now is sometimes called weak AI, narrow AI, or artificial narrow intelligence (ANI): AIs that are trained to perform specific tasks but aren't able to do everything. This still enables some pretty impressive uses. Apple's Siri and Amazon's Alexa are both fairly simple ANIs, but they can still respond to a wide number of requests.
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