I'm not sure whether I'd really call the AI in this game good or not... I'm no Smash expert, but having exhausted myself fighting level 9 AI opponents in the Japanese version of the game, I've definitely noticed a lot about them.
As far as reacting to your moves goes, the AI in Smash 4 is probably around the best. The CPU players will read your button inputs and react instantly. They'll turbo mash out of grabs, perform perfect blocks on point blank attacks, and aim/time their attacks to match every little move you make. For instance, I've attempted to smash-attack Meta Knight, only for him to use his down-B on the very frame my attack started, causing him to disappear just in time for my attack to miss and then counter attack. Another example: Yoshi will react to your directional input when throwing eggs and ALWAYS aim perfectly with inhuman anticipation and accuracy. If the CPU is controlling a character with a counter move or reflector, they WILL abuse it to borderline unfair levels thanks to their ability to read your inputs. Fighting Little Mac (especially on his home stage) is an absolute nightmare thanks to this.
The computer players will commonly punish you with grabs and take advantage of the ending lag for your attacks. They will also edge-guard you, with some characters like Meta Knight chasing you in the air to the edge of the screen. I've seen occasions where they SD, but it doesn't happen too often.
Overall, the CPUs can be difficult to kill thanks to their immediate reflexes and quick ability to counter you. However, they have their fair share of stupid moments as well.
If you're fighting someone with a projectile, they will often spam it endlessly and will usually pay no mind to barriers. Mario will still likely keep shooting fireballs at Ness if he's using PSI magnet. They also have pretty terrible spacing judgment at times. Characters who have to charge projectiles don't seem to be very smart about rolling out of their charge to avoid an attack, and some characters are just plain stupid with the attacks they spam. Sheik leaves herself horribly wide upon trying to use her side-B, and Ganondorf loves spamming his down-B, which is easily punished.
If the computer-controlled character is far away from you and doesn't have a projectile or attack they like to spam, they will often just stand or walk around as if wondering what they should do. I've been able to fully charge Robin's thunder spell while Meta Knight just stood in one spot...
The AI can also be pretty stupid with their recovery moves. Sometimes, when they're knocked high into the air and being chased with aerial moves, they'll just randomly use their recovery move, leaving themselves to fall helplessly and be severly punished. They also seem to prioritize dodging before counter-attacking when being chased, so if you're edge-guarding them, they'll often just take it to the face.
It sometimes seems as though the AI isn't always aware of the differences between the characters they're controlling. I've had Ike try and punish me with a smash attack which may have worked if he were Mario, but his is so slow that I easily punished his attempted punish! Also, the CPUs aren't very careful around the Villager's tree or Pacman's fire hydrant (which has the force of a smash attack if it's sent flying), often resulting in them getting killed by these things.
Anyway, that's my ridiculous essay for the day...
