This technology is needed just to make graphics in dynamic environments approach those of static environments in games now.
Mirror's Edge (UE3) has really nice graphics, with color bleed and such, but just about everything (excluding the characters) is completely static. The sun can't move, structures can't break apart... because all of the lighting is pre-computed by the game's editor.
On the other hand, if you have an engine where all the lighting is dynamic, your game ends up looking like Doom 3. You can move anything around, including lights, in realtime. The problem with this is you only get harsh lighting and pure black shadows.
Most games now use a trade-off, with dynamic objects using dynamic lights, and the environment using pre-computed lighting. I don't think Crysis uses any pre-computed lighting(except maybe on some prefabs??), but it can use ambient occlusion to add some shading to otherwise bland interiors.