Every system that maintains a large language model conversation beyond a single session faces two inescapable constraints: the context window is finite, and information quality degrades with accumulated volume. We formalize these constraints as axioms and derive a single governing principle -- the Root Theorem of Context Engineering: \emph{maximize signal-to-token ratio within bounded, lossy channels.} From this principle, we derive five consequences without additional assumptions: (1)~a quality function $F(P)$ that degrades monotonically with injected token volume, independent of window size; (2)~the independence of signal and token count as optimization variables; (3)~a necessary gate mechanism triggered by fidelity thresholds, not capacity limits; (4)~the inevitability of homeostatic persistence -- accumulate, compress, rewrite, shed -- as the only architecture that sustains understanding indefinitely; and (5)~the self-referential property that the compression mechanism operates inside the channel it compresses, requiring an external verification gate. We show that append-only systems necessarily exceed their effective window in finite time, that retrieval-augmented generation solves search but not continuity, and that the theorem's constraint structure converges with biological memory architecture through independent derivation from shared principles. Engineering proof is provided through a 60+-session persistent architecture demonstrating stable memory footprint under continuous operation -- the divergence prediction made concrete. The Root Theorem establishes context engineering as an information-theoretic discipline with formal foundations, distinct from prompt engineering in both scope and method. Shannon solved point-to-point transmission. Context engineering solves continuity.