Biological memory networks are thought to store information by experience-dependent changes in the synaptic connectivity between assemblies of neurons. Recent models suggest that these assemblies contain both excitatory and inhibitory neurons (E/I assemblies), resulting in co-tuning and precise balance of excitation and inhibition. To understand computational consequences of E/I assemblies under biologically realistic constraints we built a spiking network model based on experimental data from telencephalic area Dp of adult zebrafish, a precisely balanced recurrent network homologous to piriform cortex. We found that E/I assemblies stabilized firing rate distributions compared to networks with excitatory assemblies and global inhibition. Unlike classical memory models, networks with E/I assemblies did not show discrete attractor dynamics. Rather, responses to learned inputs were locally constrained onto manifolds that ‘focused’ activity into neuronal subspaces. The covariance structure of these manifolds supported pattern classification when information was retrieved from selected neuronal subsets. Networks with E/I assemblies therefore transformed the geometry of neuronal coding space, resulting in continuous representations that reflected both relatedness of inputs and an individual’s experience. Such continuous representations enable fast pattern classification, can support continual learning, and may provide a basis for higher-order learning and cognitive computations.

Movie-watching is a central aspect of our lives and an important paradigm for understanding the brain mechanisms behind cognition as it occurs in daily life. Contemporary views of ongoing thought argue that the ability to make sense of events in the ‘here and now’ depend on the neural processing of incoming sensory information by auditory and visual cortex, which are kept in check by systems in association cortex. However, we currently lack an understanding of how patterns of ongoing thoughts map onto the different brain systems when we watch a film, partly because methods of sampling experience disrupt the dynamics of brain activity and the experience of movie-watching. Our study established a novel method for mapping thought patterns onto the brain activity that occurs at different moments of a film, which does not disrupt the time course of brain activity or the movie-watching experience. We found moments when experience sampling highlighted engagement with multi-sensory features of the film or highlighted thoughts with episodic features, regions of sensory cortex were more active and subsequent memory for events in the movie was better—on the other hand, periods of intrusive distraction emerged when activity in regions of association cortex within the frontoparietal system was reduced. These results highlight the critical role sensory systems play in the multi-modal experience of movie-watching and provide evidence for the role of association cortex in reducing distraction when we watch films.