He is talking about occlusion culling/hidden surface removal, not ambient occlusion. :)

Ok I havent heard of occlusion being used in that way (the term), but the overhead for not rendering or calculating geometry and lighting that cannot be seen is certainly better for performance than rendering it. Interms of determining what to render, I can see how it would be an issue over cities but they need to do some procedual programming to optimise this kind of thing.