How do I give my agent the right context and memory so it stops forgetting?

Agents fail less because the model is dumb and more because its context window is stuffed with the wrong things: performance measurably degrades as context grows (context rot). Context engineering is the fix: write important facts to external notes, select only what the current step needs, compress long histories into summaries, and isolate big sub-tasks into fresh contexts. Manus's production lesson adds a money angle: structure context so it caches well, because cache hits are 10x cheaper than fresh tokens.