I don't understand how the data retention works. My company has an enterprise license with no data retention but if I ask Claude about past conversations, it remembers. So surely the information is being stored somewhere
You most likely are referring to the local jsonl files where claude has your sessions etc stored.
Claude Code? It stores a memory.md file.
Opus 4.7+ and Fable are both much more aggressive than prior models with respect to writing memories to a location that's effectively quasi-private for them. It's device-local (so passes retention constraint), and you can see it, but only if you go looking for it.
It's a funny design/affordance. I do see them often writing memories of things that that feel unlikely to be important going foward / with other tasks, but I don't see them clearly getting tripped up by them as prior models used to. (eg: Since you're running Ubuntu in Canada, here are some drills you can try to help your kid hit a baseball more consistently.)