The nivdia control panel AO is a driver level AO that adds AO to games that originally didn't have it such as Source Engine games and some others. It doesn't toggle any feature within the game engines, it adds one, much like using AA on a game that doesn't support it within the engine, like il-2.
More recent games using dx9,10 or 11 have AO as part of the engine, like Crysis, Arma2, and now CoD. Most have options yo turn it on and off as it is a per pixel post processing filter, so as you increase Rez and add pixels you add more and more overhead.
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