More tokens -> more compute involved. Attention-based models work by attending every token with each other, so more tokens means not only having more time to "think" but also being able to think "better". That is also at least part of the reason why o1/o3/R1 can sometimes solve what other LLMs could not.

Anyway, I don't think any of the current LLMs are really good for coding. What it's good at is copy-pasting (with some minor changes) from the massive code corpus it has been pre-trained. For example, give it some Zig code and it's straight unable to solve even basic tasks. Same if you give it really unique task, or if you simply ask for potential improvements of your existing code. Very, very bad results, no signs of out-of-box thinking whatsoever.

BTW: I think what people are missing is that LLMs are really great at language modeling. I had great results, and boosts in productivity, just by being able to prepare the task specification, and do quick changes in that really easily. Once I have a good understanding of the problem, I can usually implement everything quickly, and do it in much much better way than any LLM can currently do.

I have tried getting gemini 2.5 to output "token efficient" code, i.e. no comments, keep variables to 1 or 2 letters, try to keep code as condensed as possible.

It didn't work out that great. I think that all the context in the verbose coding it does actually helps it to write better code. Shedding context to free up tokens isn't so straightforward.