Hi, we don't index the values, but rather we index metadata about the logstream, for example, service name, instance ip, and things like that and not the actual contents of the log lines.
Inside kubernetes the metatadata would be podname, namespace, deployement name, container name, etc...
We batch together sets of lines into compressed "chunks", and only add index entries per chunk. In practices, chunks have 1000s of lines in them - so the index tends to be many orders of magnitude smaller than in other systems.
From Loki's readme, It still stores the full log (but compressed), and indexes values in each logline.