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The term arises because in practice, it's most efficient to implement such intelligences as software upon a simple RISC array. This also allows such intelligences to be copied among compatible hardware. Since all computing in the world of Softwired is parallel, code-bot intelligences are described as "finitely-parallel", to contrast them with infinitely-parallel spark-based intelligences.
A code-bot may or may not be sentient. One with a dedicated program, like the bar dispenser in the River base, is no more sentient than the programs we use today. One with a flexible network on limited hardware, like one of the Third Spark's mass-produced vermbots, has an intelligence comparable to an insect(or, with intermediate hardware, an animal). One with a flexible network on reasonably-powerful hardware, like the dig-bot overseer Twinburrow, is sentient.