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What Forza is calling Drivatar is at the core the same AI system used in all previous Forza. The AI is compose using a set of decisions inputed (samples) by training session made by Turn 10.

So what the difference?

The difference now is that Turn 10 will try to use a lot of more data to make the AI... they will use all the player input in Forza 5 instead to use the few employee tranning input.

Why they are doing that?

To make the game feels more real... when you use data from a session training made by the company (or using professional races) the data will be always the same... so the default AI will always says to make a turn at 60 mph but the Drivatar will choose the best "AI" in the Cloud based in a player that fits better with your style ant that AI will make this turn at 75 mph.

I know... that is not the best example... it is a little more complex.

The big difference is that instead a default AI created by 100 "racers" input the Drivatar will give you a AI created by 1 million "racers"... so every player will collaborate to Forza 5' AI.

But that's not will make the AI better... it will make it more real... like when you play a MP with real-life person... because some Drivatar inputs will be dumb, really dumb, because some players sucks at driving skills for games.

I think Turn 10 will tray to make a balance... so if you suck then you will play against sucks AIs... and if you good then you play against good AIs.

The ideia is increase the numbers of samples to the AI take the decision into the game... the decision (AI) will be calculated by the console yet (CPU/GPU) based in the Drivatar samples collected from the players.

All driving games have samples to run the AI... Forza 5 will have the default samples (like Forza 4) and it will increase the samples with Drivatar through neural networks.

BTW there is nothing in Drivatar that can't be made by any simple dedicated server... the Drivatar is just a server that collect the data to be used by the AI Engine in the game... the AI will continue to run offline in the console CPU/GPU.