We grade the intelligence of a software based on how well it can mimic a human being. There is even a test developers refer to in order to assess if the computer can trick a human into believing that it's human. The Turing Test. If you can’t distinguish between a human being’s reply and a computer’s, the computer is considered intelligent.
In today’s world, a chatbot that sounds like a human being belongs to one of two categories:
Consider the last time you sat through a long automated phone menu where you press 1 for Spanish, 2 for account info, 3 for ... etc. A rule-based chatbot is the same technology in chat/conversation format. When you start engaging with a chatbot, it offers you a few options, you select 1, 2, or 3 and the chatbot responds based on your choice. This chatbot has a pre-programed answer that guides the conversation to flow in a structured manner.