On the back end a language model is effectively writing a long detailed prompt describing this image exactly right? The image model can't know this.

ChatGPT Images (and some others like Nano Banana) are autoregressive models, and the text model generates the tokens in the same way which are then passed in the correct form for an image model to decode. That is how it can reason the prime numbers + Pokemon + art style conditional.

It is different from earlier image models which just use a simple text encoder and struggle with conditional logic if not explicitly trained for it.

Yes it thinks about it and then calls the image tool with the detailed prompt with exactly what to include in the image