It's all artistic preference, especially as far as AO is concerned. Just note that Overlay is a few extra math instructions, nothing to be concerned about, but it's just not as efficient as multiply. Another thing to note: As far as I can tell you are previewing your "multiply" in a Blend_Overlay node, which applies an…
AO seems to generally be used with the multiply blending mode as far as I've seen, however in Unreal Engine I made some comparisons and the Overlay node seems to give a better result. A value of 0.5 would be the original map, lower than that would be a lower intensity, higher would be a higher intensity. Is there any…
Multiply versus overlay are methods for blending. I make an assumption the calculation is same in Unreal as photoshop. You can read how they work and intended uses here: Multiply, Screen, and Overlay Blending Modes in Photoshop - dgrin (smugmug.com)
"AO seems to generally be used with the multiply blending mode as far as I've seen" That's not true. As @Eric Chadwick mentioned it is meant to be plugged into the AO slot, that's it. Of course one can get creative and feed it into various other aspects of the materials, but that is not the norm/standard way of doing…
It's worth noting that ambient occlusion is meant to occlude only ambient lighting, not direct lighting. If you multiply/overlay it with your diffuse textures, they'll ALWAYS be darkened/brightened regardless of the lighting. Think of a sofa with soft cushions. The ao will darken the crevices between the cushions, which is…