Progressive Disclosure in Claude Code

Quick Overview

The industry trend, confirmed by Cloudflare, Anthropic, and Cursor, is moving away from loading all Model Context Protocol (MCP) tool definitions upfront and towards progressive disclosure, where tools are loaded on-demand as files, resulting in massive context reduction and enabling agents to tackle much larger, more complex tasks.

Key Points: Cloudflare's 'Code Mode' achieved an 81% token saving by generating TypeScript code that runs in an isolated sandbox instead of JSON tool calls. Anthropic confirmed this pattern with three new features: Tool Search Tool (85% context reduction), Programmatic Tool Calling, and Memory Tool (file-based storage). Cursor's 'Dynamic Discovery' achieved a 46.9% reduction in context usage by dynamically loading only the necessary tools. The core insight is that agents need a filesystem and bash, allowing tools to be treated as files loaded on-demand, which keeps context small. The combination of MCP + Filesystem + Code Execution is presented as the definitive answer for effective AI agent tool use. Anthropic's new automatic clearing feature reduces token usage by 84% in 100-turn evaluations by dropping stale tool results.

Context: This video discusses a significant shift in how AI agents manage the tools they use, moving away from loading all tool definitions (Model Context Protocol or MCP) directly into the prompt context. This initial approach led to context bloat, limiting the complexity of tasks agents could handle. The presentation traces this evolution from Cloudflare's initial work to Anthropic and Cursor implementing similar optimization strategies, all converging on the idea of progressive disclosure and treating tools as files managed via a filesystem.

Detailed Analysis

The video argues that the industry is converging on a new pattern for AI agent tool use: progressive disclosure where tools are loaded on-demand as files, rather than loading all MCP tool schemas upfront into the context window. Cloudflare started this trend with 'Code Mode' (Sept 2025), which generated TypeScript code to run in an isolated sandbox, achieving an 81% token saving. Anthropic followed (Dec 2025) with its Tool Search Tool, achieving an 85% context reduction by searching tools on-demand. Cursor also implemented Dynamic Discovery (Jan 2026) with a 46.9% reduction. The key components agents need are a Filesystem (for reading/writing/searching files), Bash (for executing commands/scripts), and Code Execution (calling MCP via generated code). This mindset shifts tool management to files, discovery to search, and execution to code, keeping context small. Anthropic also introduced automatic context clearing for old tool results, leading to an 84% token reduction in 100-turn evaluations. The overall conclusion is that 'Context is no longer the bottleneck,' allowing agents to tackle multi-hour tasks, integrate 100+ tools, and run complex workflows overnight because the context window is no longer constrained by hundreds of thousands of context tokens used by unused tool definitions.