Zoom in on the one internal layer that is not a gate. The Candidate ($\tilde{C}_t$) uses $\tanh$ instead of a sigmoid because its job is to propose real, signed content — not to open or close a valve.
Three of the LSTM's four internal layers are sigmoid gates that control flow. This one is different: it is the only layer that manufactures the information itself.
The candidate layer — written $\tilde{C}_t$ and read "C-tilde" — takes the same merged vector as every other layer and produces a fresh piece of content:
$$\tilde{C}_t = \tanh(W_C \cdot [H_{t-1}, X_t] + b_C)$$
It has no authority. It cannot write to memory on its own; the Input Gate decides how much of it survives. Think of it as an employee drafting a proposal and the input gate as the manager approving some, all, or none of it.
This is the question that separates people who have memorised the diagram from people who understand it. The answer is sign.
Being zero-centred also helps optimisation: the updates do not carry a systematic positive bias that the rest of the network has to cancel out.
Because the cell state is repeatedly added to, an unbounded proposal would let $C_t$ grow without limit over a long sequence and blow up the activations. Clamping every proposal to $[-1, 1]$ means each step can move a memory slot by at most 1. Combined with the Forget Gate's decay, the cell state stays in a numerically comfortable range no matter how long the sequence runs.
The same squashing that keeps things stable creates a trap. The derivative of $\tanh$ is $1 - \tanh^2(z)$: it peaks at 1.0 when $z = 0$ and collapses toward 0 as $|z|$ grows. Once a unit is driven to $z = \pm 4$, its output is stuck near $\pm 1$ and almost no gradient flows back — the unit has effectively stopped learning.
This is why weight initialisation and normalisation matter so much. They keep pre-activations near the middle of the curve, where the layer is still responsive.
The candidate layer is the LSTM's content generator: bounded, signed, and completely powerless on its own. Content and control are deliberately separated — $\tanh$ proposes, sigmoid disposes. The last piece of the cell decides what the outside world gets to see: the Output Gate.
Zoom in on the one internal layer that is not a gate. The Candidate ($\tilde{C}_t$) uses $\tanh$ instead of a sigmoid because its job is to propose real, signed content — not to open or close a valve.