
But what is the Central Limit Theorem?
The Central Limit Theorem (CLT) is a fundamental concept in probability theory that states that as the sum of events gets larger, the distribution of those events will increasingly resemble a bell curve, regardless of the distribution of the individual events. This section introduces multiple approaches to understanding the CLT, including simulations with different dice distributions, finding the range of values with 95% certainty, and explaining the third assumption of finite variance. The CLT realigns all the distributions so that their means line up together and rescales them so that all the standard deviations equal one, resulting in a universal normal distribution function. The video emphasizes caution when assuming variables follow a normal distribution without justification and unravels the mystery of why the standard normal distribution has a pi in it, tying it back to circles.