What the heck does AO stand for, and why do I care about weather or not I use it in a render? I’m sure this makes me look incredibly stupid… 
NO! It dosent make you look stupid! You’re going to have a easier time learning if you just ask! 
I don’t really understand that. How about explaining it in layman’s terms?
:x Now I have a headache. Maybe someone else could tell you about it? I’m not good with AO myself 
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From what I understand about AO, it uses mathematic equations and formulas and such to calculate how light and objects interact. It also calculates the light given off by the objects themselves.
-Laurifer
It’s basically a way to get the effect of global illumination without having to set up your own GI hemisphere. In case you don’t know what global illumination is, it is light that comes from all directions like sunlight, which is bounced off other objects. Normally you create a geometric hemisphere in Blender and place lights at all the vertices using dupliverts. This is very good at lighting up all parts of your scene so that the effect of GI is achieved.
To save you the hassle, you can achieve a similar effect by clicking AO on. I wouldn’t keep it on though because it’s fairly slow (even on low quality settings). You also have less control than if you light the scene yourself.
It’s basically a way to get the effect of global illumination without having to set up your own GI hemisphere. In case you don’t know what global illumination is, it is light that comes from all directions like sunlight, which is bounced off other objects. Normally you create a geometric hemisphere in Blender and place lights at all the vertices using dupliverts. This is very good at lighting up all parts of your scene so that the effect of GI is achieved.
To save you the hassle, you can achieve a similar effect by clicking AO on. I wouldn’t keep it on though because it’s fairly slow (even on low quality settings). You also have less control than if you light the scene yourself.
http://www.andrew-whitehurst.net/amb_occlude.html[/quote]
Now that, I understand. Thank you very much, OSX.