SSAO is an ingenious techinque to mimic some effects of Global-Illumination. Instead of letting light bounce of every surface and making your GPU reach 2000 Degrees, the guys at Crytek created SSAO. SSAO casts rays from every pixel in screen space, and uses depth and normal information to calculate occlusion of each pixel. A more occluded pixel is less likely to receive many light bounces, so lets darken those pixels!

Currently implementation: http://www.gamerendering.com/category/lighting/ssao-lighting/

Look into SSDO: http://www.mpi-inf.mpg.de/~ritschel/Papers/SSDO.pdf