I’m use to baking my ambient occlusion into the diffuse (color). I was wondering what the benefits are to using the Ambient Occlusion material input instead? The downside is it would take more memory holding yet another texture, I’d imagine.
The ambient occlusion material input is only applied to indirect lighting, where diffuse is applied to both direct and indirect lighting. Ambient occlusion is a really poor approximation to local shadowing for direct lighting, you want shadow map shadowing instead, as it will shadow the right direction for the light. The indirect lighting that material AO is applied to is ambient cubemap, precomputed diffuse GI (lightmaps and light probe lighting), and indirect specular (reflection environment).