# How Claude Code Works: Agent Loop, Tools and Context | Alher Tech

> Learn how Claude Code works: the agent loop, native tool use, the 1M-token context window and why it ships production-grade B2B SaaS faster than any chat interface.

- Canonical page: https://alhertech.com/en/claude-code/how-it-works/
- Site: Alher Tech (custom software, AI agents and SEO engineering, https://alhertech.com/)
- Contact: https://alhertech.com/en/contact/

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Claude Code is a terminal-first coding agent powered by Claude Opus 4.7. It reads your repository, plans changes, edits files, runs commands and verifies results, all through a tight agent loop that keeps a senior engineer in the driver seat.

Updated: April 24, 2026

## The agent loop

Every turn Claude Code reads the latest user instruction, decides which tools to call (Read, Edit, Bash, Grep, etc.), executes them and feeds the output back into the model. The loop stops when the user accepts the change, when tests pass, or when an explicit halt condition triggers. This loop is what makes Claude Code different from pure autocomplete: it can actually finish a task rather than suggest a line.

## Tool use

Tool use is native to Claude Opus 4.7. The agent uses Read for files, Edit for surgical diffs, Bash for shell commands, Grep for search and specialized tools like Task (sub-agents) and Agent (spawn workers). You can extend the tool set with MCP servers, which expose arbitrary HTTP or local capabilities to the agent.

## Context window and memory

Claude Code runs on the 1M-token context window of Opus 4.7, enough for entire mid-sized repos. Persistent memory lives on disk inside the project directory: CLAUDE.md files carry team conventions, a per-project memory folder stores facts learned across sessions, and the session transcript is replayed when you resume. This is why Claude Code performs better than a fresh chat session on the second day of the same project.

## Why it ships SaaS faster

For a B2B SaaS or MVP build, the loop compresses three roles into one. The agent plans like a tech lead, edits like a mid-level engineer and runs tests like QA. At Alher Tech we routinely ship a working production-grade SaaS backend (auth, billing, multi-tenancy, deployment) in 2–3 weeks with a single senior engineer driving Claude Code full-time.

## Frequently asked questions

### Does Claude Code replace my developers?

No. Claude Code multiplies senior engineers. It needs someone who can review diffs, make architectural decisions and steer the agent when it strays. What it replaces is the mechanical half of development: boilerplate, tests, migrations, CRUD.

### How is this different from ChatGPT or a VS Code extension?

Chat surfaces give you suggestions; Claude Code actually edits your files, runs tests and commits. It operates inside a shell, not a chat window, so it can verify its own work end-to-end.