Imo the effect is pretty hard to show in a video properly. Comparison screenshots show it the best. In this video it's easiest to see on Eli's chest when he moves his arms in front of him or between Alyx and Eli when they hug. All the shadow effects there are from AO. The room's corners have very visible shadows in them as well. The effect eats a lot of FPS in some cases but in turn makes games look very natural. Things look like they belong in the same space when they cast shadows on eachother.