Bak in the day when I started using Blender, global illumination required some creative work-arounds. The most popular being a low power, duplicated spot lights parented to a 1/2 an ico-sphere.
For the time, it was a great solution. You could create nice lighting and software overlapping shadows with a very reasonable render time. And best of all, it was something I could set up easily and use effectively. As time went on, coders added a new lighting option, Ambient Occlusion (AO). It created nice even shadows and added overall lighting, but it was rather slow and a little confusing to set up without a cheat sheet. So many users (myself included) stuk with the duplicated spot light method.
More time passed, and the ambient occlusion options were refined and sped up considerably. Which was great, unfortunately for me, it was still rather confusing to set up unless I had a cheat sheet. And even with a cheat sheet, I generally didn't get results I liked.
So when 2.5 came out I decided to play with the latest incarnation of Ambient Occlusion. Hoping that somehow it might actually make sense. Oddly enough, although it still has the same options, the new lay out and grouping makes it seem far less confusing for me. Something I am attributing to the fact that now I can clearly see just what goes with what.
What was once stuffed all into one panel, now occupies four separate panels. So let's take a look at what we now have. This is a simple scene with no lamps added yet. We are first going to look at each section in separately.

Ambient Occlusion:

Multiply of course is going to multiply any shadows you already have. Since there are no lamps in this scene, you get a blak image.

I finally get it   - ambient Occlusion-1.jpg

Add brings more light into your scene, so even with no lamps present you get a lighted image

I finally get it   - ambient Occlusion-2.jpg

Environment lighting

Environment lighting adds light based on one of three options, White, Sky Color or Sky Texture. You can control how much light is added with the energy slider.
White adds even white light Sky Color adds whatever color you sky is Sky Texture adds any textures you might have set for the world in addition to the skycolor, such as clouds.

I finally get it   - ambient Occlusion-3.jpg

Indirect lighting

Indirect lighting will provide the bouncing of light from one object to another. It does however require that light actually be present. And in our case, no lamps means no bounc-ing of light.


The "Gather" panel gives you two options for generating AO, Raytrace and Appróximate, with Appróximate of course being much
faster. So it is a matter of what you prefer as to which you use for the gathering method.
Having it all split out like this, made it much easier for me to see what effect setting changes made on my image.
Now that it finally makes a little more sense and is much easier to see what is doing what, let's put it all together.

I finally get it   - ambient Occlusion-4.jpg

I finally get it   - ambient Occlusion-5.jpg

Even with no lamps added, you already have the start of some pretty good lighting.
Of course adding lamps will add impact and allow you to highlight or focus attention on certain details of your image.
One more added bit of fun, Environment Lighting can be affected by Sky & Atmosphere settings under the Sun lamp settings. So go ahead and add a Sun Lamp, position it anywhere you want.
Scroll down to the Sky & Atmos-phere panel and toggle it On, there are a couple of presets that you can chose from, or you can experiment and come up with your own.
In the Environment Lighting pan-el, set it to either Sky Color or Sky Texture and render.
Since there is now a lamp in the scene, you may want to lower
your settings in the AO, Environ-ment Lighting and Indirect Lighting panels, especially if it seems to bright.
Well there you go, doesn't that seem so much easier?

I finally get it   - ambient Occlusion-6.jpg