Ambient Occlusion (AO) is a term used for a "cheap" way to render a diffuse scene without colours. The look of an AO rendering can be quite pleasing, but it's technically not accurate. Because of the rendering speed AO has been embraced by developers of computer games. Arnold provides an AO shader ( but not in context with colour. If you use a standard Arnold surface shader you won't find an input for Ambient Occlusion.
Many CGI artists create AO images and mix them with the colour of the objects in the scene. The effect can be very subtle, but over all it's powerful and should be used any time you have an AO file at hand, like when downloading the CC licensed and wonderful textures of Nikola Damjanov:
The music: "Computer Animation", "african122 beat" and "dubius 170" by Maximilian Schönherr, licensed via GEMA.

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