diff --git a/README.md b/README.md
index 85d83cd..6534b98 100644
--- a/README.md
+++ b/README.md
@@ -5,9 +5,11 @@
 [![License](https://img.shields.io/pypi/l/context-compiler)](https://pypi.org/project/context-compiler/)
 [![codecov](https://codecov.io/gh/rlippmann/context-compiler/branch/main/graph/badge.svg)](https://codecov.io/gh/rlippmann/context-compiler)
 
-Context Compiler helps LLM applications keep explicit premise and policy rules
-stable across turns. It blocks invalid or conflicting changes and returns
-structured decisions.
+Context Compiler maintains host-side working memory consisting of a premise and
+policies, separate from the model's conversational context. The Engine applies
+directives to that working memory so applications can maintain explicit state
+across model interactions without relying on the model to remember or infer it.
+It blocks invalid or conflicting changes and returns structured decisions.
 
 Use it when saved context and policy rules need to shape what an application
 does, not just what the model sees or says.
@@ -90,7 +92,7 @@ repair behavior.
 
 ## State Model
 
-The engine stores explicit user commitments as saved state:
+Working memory contains explicit user commitments:
 
 | State | Meaning |
 | --- | --- |
@@ -120,8 +122,8 @@ To replace an existing `use` policy:
 use podman instead of docker
 ```
 
-If `docker` is absent from saved state, the replacement fails and leaves state
-unchanged. It does not become plain `use podman`.
+If `docker` is absent from working memory, the replacement fails and leaves
+working memory unchanged. It does not become plain `use podman`.
 
 To remove a policy or clear state:
 
diff --git a/src/context_compiler/engine.py b/src/context_compiler/engine.py
index 7a439c9..62923df 100644
--- a/src/context_compiler/engine.py
+++ b/src/context_compiler/engine.py
@@ -27,8 +27,8 @@
 PolicyValue = Literal["use", "prohibit"]
 
 
-class _State(TypedDict):
-    """Versioned authoritative state."""
+class _WorkingMemory(TypedDict):
+    """Versioned internal working memory."""
 
     premise: str | None
     policies: dict[str, PolicyValue]
@@ -37,7 +37,7 @@ class _State(TypedDict):
 
 class _EvaluatedTransition(TypedDict):
     decision: UpdateDecision | SemanticErrorDecision
-    next_state: _State
+    next_state: _WorkingMemory
 
 
 _NO_DIRECTIVE = NoDirectiveDecision()
@@ -49,7 +49,7 @@ class Engine:
     __slots__ = ("_state",)
 
     def __init__(self) -> None:
-        self._state: _State
+        self._state: _WorkingMemory
         self._replace_state(_initial_state())
 
     @property
@@ -105,7 +105,7 @@ def apply_directive(
         return evaluated["decision"]
 
     def _evaluate_directive_transition(
-        self, state: _State, directive: CanonicalDirective
+        self, state: _WorkingMemory, directive: CanonicalDirective
     ) -> _EvaluatedTransition:
         error_decision = self._pre_mutation_error(directive, state=state)
         if error_decision is not None:
@@ -117,11 +117,11 @@ def _evaluate_directive_transition(
             "next_state": next_state,
         }
 
-    def _replace_state(self, state: _State) -> None:
+    def _replace_state(self, state: _WorkingMemory) -> None:
         self._state = state
 
     def _pre_mutation_error(
-        self, directive: CanonicalDirective, *, state: _State | None = None
+        self, directive: CanonicalDirective, *, state: _WorkingMemory | None = None
     ) -> SemanticErrorDecision | None:
         candidate_state = self._state if state is None else state
         # Single error path: all error outcomes are detected before any mutation.
@@ -203,7 +203,9 @@ def _pre_mutation_error(
 
         return None
 
-    def _apply_directive(self, directive: CanonicalDirective, *, state: _State) -> _State:
+    def _apply_directive(
+        self, directive: CanonicalDirective, *, state: _WorkingMemory
+    ) -> _WorkingMemory:
         next_state = deepcopy(state)
 
         if directive.kind is DirectiveKind.SET_PREMISE:
@@ -249,7 +251,9 @@ def _apply_directive(self, directive: CanonicalDirective, *, state: _State) -> _
 
         return _initial_state()
 
-    def _apply_replacement_explicit(self, state: _State, new_item: str, old_item: str) -> None:
+    def _apply_replacement_explicit(
+        self, state: _WorkingMemory, new_item: str, old_item: str
+    ) -> None:
         new_key = _normalize_item(new_item)
         old_key = _normalize_item(old_item)
 
@@ -260,7 +264,7 @@ def _apply_replacement_explicit(self, state: _State, new_item: str, old_item: st
         state[STATE_POLICIES][new_key] = POLICY_USE
 
 
-def _initial_state() -> _State:
+def _initial_state() -> _WorkingMemory:
     return {
         STATE_PREMISE: None,
         STATE_POLICIES: {},
@@ -268,7 +272,7 @@ def _initial_state() -> _State:
     }
 
 
-def _load_state_json(payload: str) -> _State:
+def _load_state_json(payload: str) -> _WorkingMemory:
     try:
         raw = json.loads(payload)
     except json.JSONDecodeError as exc:
@@ -277,7 +281,7 @@ def _load_state_json(payload: str) -> _State:
     return _load_state_obj(raw)
 
 
-def _load_state_obj(raw: object) -> _State:
+def _load_state_obj(raw: object) -> _WorkingMemory:
     if not isinstance(raw, dict):
         raise ValueError("Invalid state payload.")
 
@@ -379,5 +383,5 @@ def _repair_set_premise(value: str) -> CanonicalDirective:
     )
 
 
-def _update_decision(previous_state: _State, next_state: _State) -> UpdateDecision:
+def _update_decision(previous_state: _WorkingMemory, next_state: _WorkingMemory) -> UpdateDecision:
     return UpdateDecision(changed=previous_state != next_state)