Latent variables can encode information inferred from observations but not directly contained in the observed data, such as whether a coin is fair based on coin flips.

“I actually like usually what you what you then go go is you say you want information in your latents or just basically reveal information which is not in the data by looking at latents. So classic example is I flip a coin I can observe kind of heads or tails and what I'm actually interested in is is the coin fair or not. If the coin isn't fair then kind of you will see this in the latent.”