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This is undocumented (frustrating) but it looks like it's chunking them, running embeddings on the chunks and storing the results in a https://qdrant.tech/ vector database.
We know it's Qdrant because an error message leaked that detail: https://twitter.com/altryne/status/1721989500291989585
I wrote a cli wrapper for assistants (GPTs) to make it easier to test out these features https://github.com/HumanAssistedIntelligence/OAICLI
I had some trouble forcing assistants to use the tool {"type": "retrieval"}. However, you can be explicit in your prompts and messages though, and I found it to work quite well.
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