I don't know what insight is. So this is more of my opinion to understanding 50% of your question. Just my few cents, maybe it helps you.

Assume there is a space of expansion E, where anything in Z can be expanded by additional filler e.g Harry Potter with a dictionary definition after every word. Novel yes, insight no O is never reached.

Assume there is a space of remixes and recombinations R in O and not current in Z, this space can be found by LLM e.g Harry Potter vs Moby Dick. That is entirely novel, but from existing material contained in Z. Things that aren't contained in Z can not be recombined or remixed, O is never reached.

Assume there is a space of transfers T, where knowledge or structure in a subset of Z can be applied to another subset of Z, creating a new thing, e.g Harry Potter as a Shakespearean sonnet. Again this is novel, but not insight. We can change the structure of a thing sure. Structures not contained in Z should not appear, O is never reached.

These are just transformation, based on the structures and object from the existing. Illusive to us, as we neither know all objects or structures contained in Z, as it is already way to vast.

So I prompted an LLM....

"Dear LLM, write a poem in 3 words of a person using a vending machine. The last word is made up expressing the sound." LLM: Coins clink/jingle Buttons press/beep Snacks zizzle/sizzle

Note plural, the misunderstanding, in between slashes it flipped words and me being a bad prompter. My point is this:

throw in push rrrrummms

The structure of two verbs and a made up sound as poem might not be contained in Z. Writing out a sound somewhat autistically is not contained in Z.

These type of poems aren't novel either, but fun.

undress cover Zzzrrrhhh

grab unfold Aachooo

There is a reduced version of O comprised to a Z from that all O can be recombined and found. O can be safely reduced by E R T, Z only needs to contain all objects and structures, not all expansions, recombinations and transfers.

In the latter probably lies the problem of LLM eating themselves, when fed with their own output, I guess.