AI stands for "Artificial Intelligence." Artificial intelligence in Super Smash Bros. Melee refers to the intelligence of any computer player in vs. mode and 1p mode. In vs. Mode you can set the AI for a CPU, and in Classic mode, Adventure Mode, and All-Star Mode you can set it to some degree.
AI levels range from 1-9. Level 1 being easiest, level 9 being hardest. Beginners tend not to realize that the best way to practice against a computer is to fight a level 1. The reason for this is that the higher the level, the weirder and spammier the play style. The also have much worse DI. Level 9s fight like no human ever will, so it's giving you the wrong kind of practice. For best results, fight against a level 1 and practice combos.
One of the complaints about SSBM and SSB is that the AI is really bad. There are multiple glitches with the AI and many of them can be seen on Youtube. Examples of Bad AI:
SSB(64)
- Falcon/Other Characters (Besides JigglyPuff, pikachu normally and sometimes Ness): If you hit them while they are recovering, they won't do anything, not even try to recover again.
- Pikachu, samus/dk (until they fully charged), spams b