On March 13, CD Projekt released a major patch (opens in new tab), the second update for the next generation of The Witcher 3." Among the various fixes, the game's overall stability and performance have also been improved." The patch notes begin at the top of the page. A bit below that,

"Horizontal-based ambient occlusion has been restored. Players who previously had ambient occlusion turned off will need to turn it off again, which can be found under Options → Video → Graphics." Saved. Grass shadows fixed.

The next-gen, 4.0 version of The Witcher 3 was a puzzling experience. The new quests, equipment, and zoom-in camera are game changers, among other things, but the implementation of the DX12 graphics features is sloppy at best. With ray tracing turned on, this eight-year-old game brings all but the powerful RTX 40 series GPUs to their knees.

Loading in update 4.02 has not changed that. Unless you have a brand new GPU that accepts plutonium fuel rods, you probably won't be able to get stable 60fps with RT enabled. Consistent with the patch notes, this addresses a major issue noted by Digital Foundry (opens in new tab). My performance is stable after the initial stutter, presumably due to the shader cache being cleared and needing to be compiled.

A more welcome change for the average gamer is the return of the aforementioned HBAO. For those who have never been shoved into a rocker, ambient occlusion is, more broadly, a shadow rendering technique that focuses on soft shadows of small details that add visual depth to 3D models.

The original release of The Witcher 3 featured both screen space and horizon-based AO, with the latter generally regarded as the superior option. The first 4.0 next-gen patch, annoyingly, eliminated HBAO as an in-game option, leaving only the inferior SSAO or the gorgeous but GPU-burdening ray-traced AO options. Here's another gallery for comparison:

The Witcher 3's AO has a particularly noticeable difference in the representation of foliage, with HBAO adding a bit more shadow and pop. The raytracing options are great, of course, but I'm no Mr. Moneybags!The RTX 3070 is a great card and an honest and respectable GPU that I can be proud to use for many years to come. However, the Witcher 3 ray tracing is toothless on the 3070 at 1440p.

If you can be convinced not to trace every ray, then Witcher 3's 4.0 is already a great update overall, and 4.02 will right the historical wrong of eradicating HBAO. My beloved Shadow of Grass is back and we can finally spend some time healing. I've also included the full patch notes (minus the console) below: