The first case can be programmed by man, since man knows what responses to certain stimuli will happen under expected situations, or man is certain that the program will give the right results with logic. This is the way AI does, however this gives us a misconception that AI has true intelligence because we humans often act in the same way or AI shows the same function as an intelligent life does.
What I am reasoning here is to show that to choose right rules by chooser's own values among a lot of rules needs true intelligence, and false intelligence can not choose right rules among a lot without foreign prompt or guidance. Only highly developed lives can... when they are facing new, unexpected and ever-changed situations or conditions, which are common experiences in their lives. This is why we have not made a general program acting as lawcourt judges, schoolteachers or hospital doctors so far.
Modern technics with digital computation can solve rationalized problems only, and their capacity in this category overruns greatly that of human being. But intelligence is used to solve perceptual or "consense" problems.
Intelligence is referred to as more or less a subjective concept. The important thing to AI or AL is how to make it in a right way and how far we can go with the choices.
There is, however, the misuse of the concept of intelligence. Modern technics with computers can make almost everything a "look-like" or "act-as-if" of another thing including a show of "learning" to cheat our sense organs and feelings.
The program function also gives us a misconception that AI can perform the same function as an intelligent life does, but I would say that the function is controlled by the makers of AI in the end. I am strongly unwilling to recognize that the material world has its own desires and wills to reach no matter how vividly it shows, let alone its own values. Intelligence is a PROCEDURE or COURSE with both ends, not result only. Function or virtual reality just allows us to see the cause and result only.
I've got an example of function: Suppose "12345 divided by 98.76" is a stimulus, cause or input and 125 is the response, result or output. How can we judge whether it is from intelligence or not. We may think it is from intelligence simply because we humans needs intelligence to figure it out. But what if it is from a calculator? Or there is even a screen show of the calculation procedure on a blackboard as a virtual reality?
The difference is usually at the beginning moment of a performance between a non-life automation system and an intelligence system. If the beginning of a performance is done by the program when a certain conditions are due or specified from outside, we dont regard it as intelligence because it is fully programmed or unable to choose rules. And in a certain case, a performance starts a program to reach its own purpose without the right conditions that anyone of the programs needs to run exactly, we regard it as intelligence, because there is a inner drive "to choose rules". The latter case here seems unthinkable, but highly developed lives can. The beginning is related to "choose rules". There are a huge number of independent rules we have made and we can choose, but a non-life AI has only ONE rule to run, though it is more complicated, maybe better than any of the rules in human brain.
There are two meanings in the word ARTIFICIAL, man-made and unreal or false. Now we have got 3 kinds of intelligence, life intelligence, man-made true (real) intelligence and man-made untrue (unreal) intelligence. I doubt virtual reality of intelligence. It just leads us to games but not intelligence.
Suppose an AI system has more than one rules. Thus all the rules should be independent of each other. There must be a function to choose these rules, change these rules or create new rules by learning. The key problem is how the system does it. A program? A gray or correlational analysis? Or quantum computers? Is there an inner, not extrinsic, dynamic balancing as values? We can never realize fuzziness with precise methods. This is the profundity of our world.
However we can make better and better computers and robots to serve us mankind. We are the master of the world with our intelligence unless ALs with super intelligence show up.