How can something have general intelligence if its incapable of understanding reality sufficiently to distinguish itself from not itself?

Why is anyone still talking about AGI? Every thread starts with asking whether we have AGI, and then backtracks into trying to define what AGI is, and splits off in a dozen different directions.

I assume science fiction is to blame. All the AI were either written as machines of pure logic that exploded when exposed to the liar's paradox, or conscious like Star Trek's Data.

(Though at least with Data the script writers had other characters openly dismiss the possibility he was sentient; the technobabble may have been nonsense, but treat it as a space opera and look at how they portray the human condition through each character and it gets much less absurd).