A perfect RAG system would probably outperform everything in a larger context due to prompt dilution, but in the real world putting everything in context will w

A perfect RAG system would probably outperform everything in a larger context due to prompt dilution, but in the real world putting everything in context will win a lot of the time. The large context system will also almost certainly be more usable due to elimination of retrieval latency. The large context system might lose on price/performance though.