It depends actually. AI wars is still under active development. (Really active, at least one patch each week. Superb work from them).
What happens if the AIP goes up?
This list is based on the most recent patches (6.003 with the DLC, but that should not matter). I really cannot comment on older patches. It changes a lot. So update, if you can read this, you can update the game.
- Increase the amount of ships you get each attack wave.
- Increase the mark of the ships you get each attack wave. (In recent patches there is not a set point any more where the ships change from mark 1 to mark 2, it is now a percentage). But you can see the point where it changes by hovering over the AIP (AI-Progress)
- Increase the types of ships the AI has access to. After a certain (hidden, there is a list on the wiki) threshold the AI gets new ships. They are called bonus tech ships (on the wiki).
- The amount of ships the AI gets when reinforcing a planet. (Note, the amount of planets not owned by the AI also influences the amount of planets the AI is allowed to reinforce).
- DLC Timing of Exogalactic Strikeforces. The higher the AIP, the quicker, "Broken Golems - Hard", and/or "Spirecraft - Hard" strike forces arrive.
Note Under the hood the AI gets ship points for each point of AIP you got. It uses these points to buy ships. So that is why at high AIP you might only get two ships (badass ones), and at low AIP you get 4 fighters.
What happens when AIP goes down?
- The wave sizes and wave types will be reduced. (so, a 200 ship wave with 100% mark 2 ships will be downgraded to 190 90% mark 2 and 10% mark 1 wave).
- Existing ships will not be removed.
- Bonus tech ships will not be removed, and stay available to the AI.
note AIP reduction cannot be wasted. When you are at AIP 10 and reduce it by -20, the game keeps track of the reduction. So reduce that AIP when you can. You can waste a SuperTerminal however. Just not the AIP reduction it creates. (I use waste in the broadest sense, as in it can lose you the game).
What is not influenced by AIP?
- AI tactics are not changed by higher AIP.
- Timing between waves
- Timing between placement of reinforcements
- Planets being on alert.
- Structures. As far as I know the AI cannot rebuild a structure when it has been destroyed. (Note Tachyon guardians are guardian ships not structures). This was planned for one of the DLC but has not been implemented yet.
- DLC size of EXO strike forces.
- DLC Timing of "Fallen Spire" Exogalactic Strikeforces. Not influenced by AIP, as the AI now considers you a major threat, and sends massive amounts of ships.
- The internal Hacking the AI value. That one is influenced by hacking.
This was written before the new patches added the new feature called the strategic reserve. The patch notes only indicate it increases periodically (whatever that means). It is unlocked at difficulties 6+. And if it is filled over 50% some new ships added to this reserve will be added to cross planet attacks.
Using the debug mode it would be possible to check if higher AIP increase the amount of strategic reserve ships the AI gets. But I have not done that. Other patch notes to seem to indicate that the higher the AIP the more strategic reserve the AI gets.
The Ancient Shadows expansion adds human champion ships. The AI gets a nemesis champion ship to counter your ships. The higher the AIP gets, the less nemesis champions get spawned. As the AI has little time to invest into these nemesis ships.
Note to the reader: what did I miss? Mention it in the comments, and I'll update the answer.