Elderscrollers Sketchy Stuff

[Wolkenfels]

Sketch of a guard officer and an ambient occlusion study. For the study, you basically assume, all of the object is equally lit by ambient light (no direct light sources!) and then you only insert occlusion shadows, no cast shadows, form shadows etc.
Occlusion shadow occurs only, where 2 surfaces come near to each other as some of the ambient light is blocked (best example: shoes touching the ground: almost all light is blocked, resulting in a dark occlusion shadow) The nearer the surfaces, the darker the occlusion shadow.

Finally someone explains it in words i can understand! Thanks for that!
How do you add the ao? overlay layer?