It's real-time, a faster one. There are actually several different versions of AO algorithms we tested, each with its advantages and weaknesses. A stronger AO effect has some issues on the transition of grass to the terrain, and as a post-process it's problematic to resolve by itself.
AO will be probably made up from several separate algorithms in the end. Terrain will use a hierarchic AO computed from the generated geometry. Another algo for AO between terrain (including trees, which are currently producing fake AO on terrain). Real-time AO will go atop of it, acting on smaller scale details, mostly for objects and grass and such.
