Ambient occlusion (as the term is typically used) is a way to approximate local reflection of uniform inbound (aka ambient) light. It does this by measuring ho

Ambient occlusion (as the term is typically used) is a way to approximate local reflection of uniform inbound (aka ambient) light. It does this by measuring how much of the exterior environment is visible at each point, as a way to modulate an ambient lighting term. It doesn't really simulate how light bounces locally around an object, nor light emitted by an object. Rather than a light transport simulation it's more of a clever CG approximation hack that looks great and is pretty cheap. But to the real point I think you were trying to make: yes, there have been a lot of strides in simulating light since the 70's, and more advanced techniques exist that should give more accurate results.