So sorry for the late reply I've been busy lately, AO is ambient occlusion and is the very darkest area of an object or being where light does not reach. This image is a pretty good example in a game based setting, it makes places darker where light is having a harder time reaching. After all, light travels only a straight line, it can't wrap around objects and illuminate everything.
It can some times be very subtle depending on the lighting situation, how many light sources and what types and intensities the lighting is. In this situation with fire, it will illuminate a lot of her but places like between her skin and her skirt, armpits and below the jaw and neck will have the biggest sources
