>They’re not communicating, you’re just being observant.

Since we are talking about hammers: you hit the nail on the head.

The only consciousness, observing, and thinking happening when a person is using an LLM is happening in the person's brain. We project our own consciousness onto them, and that is the anthropomorphizing part. Essentially we empathize with the object because they are designed to respond like a person. The "conversation" is purely an illusion.