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Ambient Occlusionsource Wikipedia
Ambient occlusion is a shading method used in 3D computer graphics  which helps add realism to local reflection models by taking into account attenuation of light due to occlusion. Ambient occlusion attempts to approximate the way light radiates in real life, especially off what are normally considered non-reflective surfaces.

Unlike local methods like Phong shading, ambient occlusion is a global method, meaning the illumination at each point is a function of other geometry in the scene. However, it is a very crude approximation to full global illumination. The soft appearance achieved by ambient occlusion alone is similar to the way an object appears on an overcast day.
Tutorial of Occlusion made simple – http://www.foundation3d.com/index.php?categoryid=39&p2_articleid=47

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