No that's not how it works. AI models don't carry a repository of images. They use algorithms. The model itself is a few gigabytes where as the training data would be petabytes - far larger than I could fit on my home desktop running stable diffusion.
It actually is close to how humans do it. You're thinking "it's copying that image" and it's not. It's using algorithms to create an image in a similar style. It knows different artistic styles because it has been fed a repository of millions of images in that style and can generate similar images in that style.
As for copyright, it was recently all over social media that AI could copy studio ghibli's art style. To the rage of social media and their fanbase, this is allowed. Studio Ghibli can't copyright an art style, and that's why AI image generators continue to include the option to generate art in that art style.
It has a lot of frustrating things in it. You lose EXP if you die. The quests have a maximum level you can do them at and still get credit, and the monsters are designed to be too strong to solo. Items break down over time, so you need merchants to make stuff for you. Anything not in your inventory or a safehouse chest goes poof at maintenance. Just yesterday I was doing a quest to follow a treasure map and I got the message "a gust of wind blows your treasure map away!" and I had to start over. It's certainly hardcore in a lot of respects.
While the difficulty is challenging, what pisses me off is two things:
I would love to play a MUD where all the monsters and NPC's are fully simulated and detailed!
That said, I suffer through it because it's an established MUD with a large playerbase, lots of online resources and documentation, has a client on Steam, and I like the character customization and multiclassing system. You feel genuinely unique with all the race class options. Different backgrounds, different guild combos. Very few other MUDs have this much character customization.