AI hasn't been redefined. For people familiar with the field it has always been a broad term meaning code that learns (and subdivided in many types of AI), and for people unfamiliar with the field it has always been a term synonymous with AGI. So when people in the former category put out a product and label it as AI, people in the latter category then run with it using their own definition.

For a long time ML had been the popular buzzword in tech and people outside the field didn't care about it. But then Google and OpenAI started calling ML and LLMs simply "AI" and that became the popular buzzword. And when everyone is talking about AI, and most people conflate that with AGI, the results are funny and scary at the same time.