SSAO is an ingenious techinque to mimic some effects of Global-Illumination. Instead of letting light bounce of every surface and making your GPU reach 2000 Degrees, the guys at Crytek created SSAO. SSAO casts rays from every pixel in screen space, and uses depth and normal information to calculate occlusion of each pixel. A more occluded pixel is less likely to receive many light bounces, so lets darken those pixels!
Currently implementation: http://www.gamerendering.com/category/lighting/ssao-lighting/
In this image we see the raw result of the raycasting in the SSAO shader. This should be blurred te remove the approximation artifacts. This will be implemented by first creating a Gaussion blur filter, which is also needed for HDR.
Many sources recommend using a bilateral blur filter. This post (http://www.gamedev.net/community/forums/topic.asp?topic_id=587178&PageSize=25&WhichPage=2) talks about creating a bilateral filter.
This presentation (http://developer.amd.com/gpu_assets/ShopfMixedResolutionRendering.pdf) also gives much information on filtering, including shadowmap filtering.
TODO
Look into SSDO: http://www.mpi-inf.mpg.de/~ritschel/Papers/SSDO.pdf