updated documentation for entity implementation

docs/services/memory-service.md

@@ -28,6 +28,8 @@ service to generate and store a vector in Qdrant.
 | SQLITE_PATH | Yes | — | Path to SQLite database file |
 | QDRANT_URL | No | http://localhost:6333 | Qdrant instance URL |
 | EMBEDDING_SERVICE_URL | No | http://localhost:3003 | Embedding service URL |
+| EXTRACTION_URL | No | http://localhost:11434 | Ollama URL for entity extraction |
+| EXTRACTION_MODEL | No | qwen2.5:3b | Ollama model used for entity extraction |
 
 ## Internal Structure
 
@@ -42,7 +44,8 @@ src/
 ├── semantic/
 │   └── index.js       # Qdrant collection management, upsert, search, delete
 ├── entities/
-│   └── index.js       # Entity + relationship CRUD
+│   ├── index.js       # Entity + relationship CRUD
+│   └── extraction.js  # Automatic entity extraction via qwen2.5:3b on Ollama
 └── index.js           # Express app + all route definitions
 ```
 
@@ -143,6 +146,32 @@ constraints to prevent duplicates:
 - `UNIQUE(from_id, to_id, label)` on relationships
 - `ON DELETE CASCADE` on relationship foreign keys
 
+### Automatic Entity Extraction
+
+After each episode is saved, `extraction.js` automatically extracts named
+entities from the conversation using `qwen2.5:3b` running on Ollama (Mini PC 1).
+This runs **fire-and-forget** — the episode is already saved and returned
+before extraction begins.
+
+**Entity types extracted:** `person`, `place`, `project`, `technology`,
+`concept`, `organization`
+
+The extraction prompt uses ChatML format (native to qwen2.5) and primes the
+response by ending with `[` to steer the model directly into JSON array output.
+A list of already-known entities is injected into the prompt so the model
+reuses existing `(name, type)` pairs rather than creating duplicates with
+different types.
+
+After extraction, each entity is:
+1. Upserted into SQLite via `upsertEntity` — notes are only written if
+   the entity is new (`COALESCE(entities.notes, excluded.notes)` prevents
+   overwriting existing notes with speculative updates)
+2. Embedded via the embedding service and upserted into the `entities`
+   Qdrant collection with `{ name, type, notes }` as payload
+
+The Qdrant payload stores enough information to reconstruct entity context
+at retrieval time without a SQLite roundtrip.
+
 ## Project Delete Behaviour
 
 Deleting a project runs as a transaction — it first nulls out `project_id`