That's pretty much what it is, as you stated it. Finding abstractions that let you encode your observational history more efficiently than you previously could, or "discovering truths", if you want to be all mystical about it.
Your definition of thinking is designed to fit AI. You set the bar low, and then get giddy when it jumps over. "Progress of scientific theory" is just a meaningless phrase that makes your claim sound authoritative when it isn't.
I'm still not hearing your definition of thinking, but given how hallowed you seem to find it, it must be truly brilliant.
Progress of scientific theory is plain to see. At each step, e.g. Kepler equations -> Newtonian mechanics -> General relativity, we encode our observations of the physical world ever more efficiently.
I gave it above, you're just too dense to even begin to try to understand what I mean. If you have a specific question I'm more than happy to try and answer it.
They cannot handle immaterial concepts such as goodness, truth, justice, etc. because such concepts are not reducible to material components. They cannot abstract at all, because to abstract something is to consider it in a universal way, leaving the material parts behind. Computers are fundamentally material, and so cannot handle any kind of immaterial concepts.
