Ambient occlusion is a neat effect giving a sense of reality to the geometry, especially in the cockpit when looking at the most recessed areas, like near the rudder pedals, the cabin corners etc… It is also applying to the scenery but is usually less prominent, especially if not set to ULTRA.
However when disabling ambient occlusion, usually in order to save a few more fps if possible, these cockpit recessed areas are becoming a little bit blunt.
Before video cards were able to do AO in real time, the artists used to bake the AO effect directly into the textures and this was not always good, but in general if lightly applied, it is much better than nothing.
I’d suggest when AO is disabled, FS2020 renders a baked AO texture overlay (or directly into the cockpit textures) which would be visible in the cockpit view only, in order to restore a little bit of the illusion.
PS: actually I personally find unless setting AO to LOW, it is creating surreal black halos around distinctive features such as the workers on the ground.