Deferred shading is a screen-space shading technique. It is called deferred because no shading is actually performed in the first pass of the vertex and pixel shaders: instead shading is "deferred" until a second pass.
On the first pass of a deferred shader, data that is required for shading computation is only gathered. Positions, normals, and materials for each surface are rendered into the geometry buffer (G-buffer) as a series of textures. After this, a pixel shader computes the direct and indirect lighting at each pixel using the information of the texture buffers, in screen space.
Screen space directional occlusion can be made part of the deferred shading pipeline to give directionality to shadows and interreflections.
Read more about Deferred Shading: Advantages, Disadvantages, Deferred Lighting, Deferred Lighting in Commercial Games, Deferred Shading in Commercial Games, Deferred Techniques in Game Engines, History