Context Window Performance Degrades at 1M Tokens Regardless of Window Size — .claudeignore Alone Achieves 80%+ Context Reduction on Typical Projects

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MorphLLM's analysis confirms models hit a clear performance ceiling around 1M tokens where irrelevant information actively worsens hallucinations. Three concrete mitigations: (1) use .claudeignore to exclude node_modules, build artifacts, lock files, and generated code — this alone achieves 80%+ context reduction; (2) use hierarchical CLAUDE.md files with subdirectory-level files for module-specific context instead of polluting project-wide context; (3) implement tool lazy loading to reduce context by up to 95% by loading tool definitions only when needed. Claude Code uses 5.5x fewer tokens than Cursor for equivalent tasks through better context management.