As far as I can tell, they are programming "AI" in a loose sense, but they are not scripting what specific behaviors any individual NPC, animal, or group behavior is going to exhibit. They are programming rules and interactions and the procedural algorithm spits out what it thinks is appropriate, just like everything else in the game. If they change the terrain, for example, the animals behave differently all on their own, they don't need to be "reprogrammed". They have talked about that kind of thing before. They've been surprised by one seemingly inconsequential or small environmental change affecting NPC/Animal behaviors in unexpected ways before.